General Electric is reportedly interested in forming a partnership with services firm Baker Hughes.
GE told Reuters on Thursday that talks are ongoing but none of the options currently under discussion “include an outright purchase.”
GE did not disclose further details about its plans.
The Wall Street Journal first reported on Thursday that GE had approached Baker Hughes about a potential deal.
A source told the Journal that a deal could call for GE to merge its Oil & Gas business with Baker Hughes and spin the combined business out into a new, publicly traded firm.
Baker Hughes has not commented on the matter.
Houston-based Baker Hughes currently has a market capitalization of $22.97 billion.
According to Reuters, the deal could be larger than GE’s $13 billion acquisition of Alstom’s energy business in November 2015.
News of the potential deal comes about six months after Halliburton’s attempt to merge with Baker Hughes was scuttled by regulatory push back.
GE’s oil and gas ordered declined 21 percent in the third quarter to $2.5 billion, with equipment down 22 percent and services down 21 percent.
GE executives said during an investor call last week that, despite the revenue dip, there “are still pockets of growth” in the Middle East and Latin America.
The company reported that all oil and gas segments saw equipment declines except Subsea and Drilling, with that segment booking a 33 percent year-over-year increase.
“We continue to see a drag in Oil & Gas, with revenue down 15 percent to 20 percent for the year,” GE executives said during the call.
GE added during the call that it expects fourth-quarter oil and gas orders to be “about flat with a year ago.”
“We think Oil & Gas is going to continue –as you look forward –to be a drag. Our team is doing a really good job; we are executing well; we’re taking cost out. But we’re not really forecasting a hockey stick in Oil & Gas,” GE chairman and CEO Jeff Immelt said during the call.
Baker Hughes Chairman and CEO Martin Craighead said earlier this week that he expects market conditions to “remain challenging near term” after his company booked $321 million operating loss for the third quarter.
The Houston-based company net loss attributable to Baker Hughes on a GAAP basis was $429 million for the third quarter on $2.4 billion in revenue, down 38 percent from the year ago period.