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Halliburton

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Halliburton Energy Services
Company typePublic (NYSE: HAL)
IndustryOil well Services & Equipment
Founded1919, Dallas, Texas, U.S. by Erle Halliburton
HeadquartersUnited States Houston, Texas and [1] United Arab Emirates Dubai, UAE CEO Headquarters
Key people
David J. Lesar Chairman, President, and CEO
ProductsTechnical services to the petroleum industry; Construction
RevenueIncrease$13.0 billion USD (2006)[1]
Decrease$2.35 billion USD (2006)[1]
Number of employees
106,000 (2005)
Websitewww.halliburton.com

Halliburton Energy Services (NYSE: HAL) is a United States-based multinational corporation with operations in more than 120 countries. It has been at the forefront of several media and political controversies in relation to its work for the U.S. Government, its political ties, and its corporate ethics.

It is based in Houston, Texas, in the United States. Halliburton opened its new headquarters in Dubai, in the United Arab Emirates, in March 2007, where Chairman and CEO David J. Lesar will work and reside, to "to Focus Company’s Eastern Hemisphere Growth".[2] Corporate offices will remain in Houston and the company will remain incorporated in the United States.[3][4][5] The company will consider Houston and Dubai as dual headquarters.

Halliburton major business segment is the Energy Services Group (ESG). ESG provides technical products and services for oil and gas exploration and production.

Halliburton's former subsidiary, KBR, is a major construction company of refineries, oil fields, pipelines, and chemical plants. Halliburton announced on April 5, 2007 that it had finally broken ties with KBR, which has been its contracting, engineering and construction unit as a part of the company for 44 years.[6]

Business overview

Energy Services, the company's historical cornerstone, includes drilling & formation evaluation, digital & consulting solutions, production volume optimization, and fluid systems. This business continues to be profitable, and the company is one of the world's largest players in this industry; Schlumberger is its closest competitor followed by Baker Hughes and Weatherford International.

With the acquisition of Dresser Industries in 1998, the Kellogg-Brown & Root division (in 2002 renamed to KBR) was formed by merging Halliburton's Brown & Root (acquired 1962) subsidiary and the M.W. Kellogg division of Dresser (which Dresser had merged with in 1988). KBR is a major international construction company, which is a highly volatile undertaking subject to wild fluctuations in revenue and profit. Asbestos-related litigation from the Kellogg acquisition caused the company to book more than US$4.0 billion in losses from 2002 through 2004.

As a result of the asbestos-related costs and staggering losses on the Barracuda Caratinga FPSO construction project based in Rio de Janeiro, Brazil, Halliburton lost approximately $900 million U.S. a year from 2002 through 2004. A final non-appealable settlement in the asbestos case was reached in January 2005 which allowed Halliburton subsidiary KBR to exit Chapter 11 bankruptcy and returned the company to quarterly profitability. So, while Halliburton's revenues have increased because of war in the Middle East, its bottom line continues to suffer.[7]

At a meeting for investors and analysts in August 2004, a plan was outlined to divest the KBR division through a possible sale, spin-off or initial public offering. Analysts at Deutsche Bank value KBR at up to $2.15 billion, while others believe it could be worth closer to $3 billion by 2005. KBR became a separately listed company on 5 April 2007.

History

1919 to 1990

Vida and Erle P. Halliburton first tried to find work cementing oil wells in Burkburnett, Texas then moved their business (New Method Oil Well Cementing Company) to the Healdton field near Ardmore, Oklahoma.

1990s

  • Following the end of the Gulf War, the Pentagon, led by then Defense Secretary Dick Cheney, paid Halliburton subsidiary Brown & Root Services over $8.5 million to study the use of private military forces with American soldiers in combat zones.[8]
  • Thomas H. Cruikshank, who served as chairman and CEO from 1989 until 1995, was replaced by Dick Cheney.
  • In the aftermath of Operation Desert Storm in Kuwait in 1991, Halliburton crews helped bring 320 burning oil wells under control.
  • In the early 1990s Halliburton was found to be in violation of federal trade barriers in Iraq and Libya, having sold these countries dual-use oil drilling equipment and, through its former subsidiary, Halliburton Logging Services, sending six pulse neutron generators to Libya. After having pleaded guilty, the company was fined $1.2 million, with another $2.61 million in penalties.[citation needed]
  • In the Balkans conflict in the 1990s, Kellogg Brown-Root (KBR) supported U.S. peacekeeping forces in Bosnia and Herzegovina, Croatia and Hungary with food, laundry, transportation and other lifecycle management services.
  • In 1998 Halliburton merged with Dresser Industries, which included Kellogg. Prescott Bush was a director of Dresser Industries, which is now part of Halliburton. Former United States president George H. W. Bush worked for Dresser Industries in several positions from 1948–1951, before he founded Zapata Corporation.

2000s

  • In December 2000, KBR agreed to build two FPSOs for Petrobras (Barracuda and Caratinga). By the time the project was complete, KBR had lost approximately $1billion on the contract.
  • On 10 April 2001 the Dresser division (excluding the former Kellogg division) entered an agreement to separate itself once again from Halliburton by management purchasing its equity, the new company to be called Dresser Inc.
  • In 2001 The Wall Street Journal reported that a subsidiary of Halliburton Energy Services called Halliburton Products and Services Ltd. (HPS) opened an office in Tehran. The company, HPS, operated "behind an unmarked door on the ninth floor of a new north Tehran tower block." Although HPS was incorporated in the Cayman Islands in 1975 and is "non-American", it shares both the logo and name of Halliburton Energy Services and, according to Dow Jones Newswires offers services from Halliburton units world-wide through its Tehran office. Such behavior, undertaken while Cheney was CEO of Halliburton, may have violated the Trading with the Enemy Act. A Halliburton spokesman, responding to inquiries from Dow Jones, said "This is not breaking any laws. This is a foreign subsidiary and no US person is involved in this. No US person is facilitating any transaction. We are not performing directly in that country." No legal action has been taken against the company or its officials. [citation needed]
  • In 2002, Judicial Watch, a public action law firm, filed suit on behalf of shareholders against Halliburton, its current and former directors, and its accounting firm, Arthur Andersen LLP and Arthur Andersen Worldwide, for alleged accounting irregularities, said to be profit inflation by accounting for cost overruns as revenue. The U.S. Securities and Exchange Commission (SEC) investigated the same issue. Halliburton counters that the practice was approved by its accounting firm, Arthur Andersen, and conforms to generally accepted accounting practices. In August, 2004, Halliburton paid a $7.5 million fine to settle the issue.
  • In April 2002, KBR was awarded a $7 million contract to construct steel holding cells at Camp X-Ray.[9]
  • From 1995–2002, Halliburton KBR has been awarded at least $2.5 billion but has spent considerably less to construct and run military bases, some in secret locations, as part of the Army's Logistics Civil Augmentation Program.[8]
  • In November 2002, KBR was tasked to plan oil well firefighting in Iraq, and in February 2003 was issued a contract to conduct the work. Critics contend that it was a no-bid contract, awarded due to Dick Cheney's position as Vice President. Concern was also expressed that the contract could allow KBR to pump and distribute Iraqi oil.[10] Others contend, however, that this was not strictly a no-bid contract, and was invoked under a contract that KBR won "in a competitive bid process."[11] The contract, referred to as LOGCAP, is a contingency-based contract that is invoked at the convenience of the Army. Because the contract is essentially a retainer, specific orders are not competitively bid (as the overall contract was). It has also been argued that when the contract was invoked in a similar manner during the Balkans crisis (when Bill Clinton was president), there was no controversy and very little scrutiny of the contract; proponents of this viewpoint argue that the KBR's LOGCAP contract was made a political issue by opponents of Bush and Cheney.[11]
  • As of 2003, Halliburton was still operating in Iran. CNN, in a report entitled "US companies are operating in Iran despite sanctions," reported that a Halliburton spokesperson told the news agency that HPS helps Iran build large oil rigs in the country's south.
  • In October of 2004, Halliburton opened a new 250,000 square foot facility on 35-acres, replacing an older facility that opened in 1948, in Rock Springs, Wyoming. With over approximately 500 employees, Halliburton is one of the largest private employers in Sweetwater County.[14]
  • In September 2005, under a competitive bid contract it won in July of 2005, to provide debris removal and other emergency work associated with natural disasters, KBR started assessment of the cleanup and reconstruction of Gulf Coast U.S. Marine and U.S. Navy facilities that were damaged in the aftermath of Hurricane Katrina. The facilities include: Naval Air Station Pascagoula, Naval Station Gulfport, Stennis Space Center in Mississippi, two smaller U.S. Navy facilities in New Orleans and others in the Gulf Coast region. KBR has had similar contracts for more than 15 years.
  • On January 24, 2006 Halliburton’s subsidiary KBR (formerly Kellogg, Brown and Root) announced that it had been awarded a $385 million contingency contract by the Department of Homeland Security to build "temporary detention and processing facilities" or internment camps. According to Business Wire, this contract will be executed in cooperation with the U.S. Army Corps of Engineers, Fort Worth District. Critics point to the Guantanamo Bay detention camp as a possible model. On the other hand, according to a press release posted on the Halliburton website, "The contract, which is effective immediately, provides for establishing temporary detention and processing capabilities to augment existing Immigration and Customs Enforcement (ICE) Detention and Removal Operations (DRO) Program facilities in the event of an emergency influx of immigrants into the U.S., or to support the rapid development of new programs. The contingency support contract provides for planning and, if required, initiation of specific engineering, construction and logistics support tasks to establish, operate and maintain one or more expansion facilities."[15] We may compare Dave Lindorff who reports in CounterPunch that "these detention camps [are] reportedly capable of confining as many as 400,000 people, and a recent report [states] that the Pentagon has a document, dated June 1, 2007, classified Top Secret, which declares there to be a developing 'insurgency' within the U.S, and which lays out a whole martial law counterinsurgency campaign."[16]
  • On April 15, 2006, Halliburton filed a registration statement with the Securities and Exchange Commission to sell up to 20 percent of its KBR stock on the NYSE under the ticker symbol "KBR", as part of an eventual plan for KBR to be a separate company from Halliburton.[17]

Iraq controversy

Wikinews has related news:

Halliburton is the only company mentioned by Osama bin Laden in an April 2004 tape in which he claims that "this is a war [in Iraq] that is benefiting major companies with billions of dollars."[18]

Internet pundit John Burnett has described Halliburton's deals as recalling a Vietnam-Era controversy. He claims Vice President Cheney's ties to the company are reminiscent of President Lyndon B. Johnson's relationships with Brown & Root.[2]

Financials

The company's contracts in Iraq are expected to have generated more than $13 billion in revenue by the time they start to expire in 2006, but most offer low margins — less than 2% on average in 2003 and just 1.4% this year for the logistics work [citation needed] making these contracts less profitable than Halliburton's core energy business. The contracts in Iraq will be more profitable after the US Army reimburses them for costs that were originally investigated as potentially inflated. [citation needed] Meanwhile, KBR reconstruction contracts in Iraq 'tracked' by the US Department of Defense were shown to include as much as 55% of total project costs as overhead.[19]

KBR has contracts in Iraq worth up to $18 billion, including a single no-bid contract known as "Restore Iraqi Oil" (RIO) which has an estimated worth of $7 billion.[citation needed]

An audit of KBR by The Pentagon’s Defense Contract Audit Agency (DCAA) found $108 million in "questioned costs" and, as of mid-March 2005, said they still had "major" unresolved issues with Halliburton.[citation needed]

Ties with Dick Cheney

In recent years the company has become the center of several controversies involving the 2003 Iraq War and the company's ties to U.S. Vice President Dick Cheney. Cheney retired from the company during the 2000 U.S. presidential election campaign with a severance package worth $34 million.[20] As of 2004, he had received $398,548 in deferred compensation from Halliburton while Vice President.[21] Concerns have been raised regarding the possible conflict of interest resulting from Cheney's deferred compensation and stock options from Halliburton. However, before entering office in 2001, Cheney bought an insurance policy that guaranteed a fixed amount of deferred payments from Halliburton each year for five years so that the payments would not depend on the company's fortunes.[21] He is legally bound by an agreement he signed which turns over power of attorney to a trust administrator to sell the options at some future time and to give the after-tax profits to three charities. The agreement specifies that 40% will go to the University of Wyoming (in Cheney's home state), 40% will go to George Washington University's medical faculty to be used for tax-exempt charitable purposes, and 20% will go to Capital Partners for Education. The agreement states that it is "irrevocable and may not be terminated, waived or amended," preventing Cheney from taking back the options at a later date.[21]

Employee safety

Halliburton does not arm its truck drivers, who in Iraq are often the target of insurgent attacks. In one case, on September 20, 2005, a Halliburton convoy of four trucks was ambushed north of Baghdad. All four trucks were struck by IEDs and were disabled. Their US National Guard escort was thought to have abandoned the disabled vehicles, leaving the unarmed truck drivers defenseless. Three of the four truck drivers were executed by the insurgents while the surviving driver, Preston Wheeler, caught the event on video. It was 45 minutes before the US military arrived again at the scene.[22] However, in a statement by senior military officials in Iraq, an investigation revealed that troops did not abandon the civilians and were exiting the "kill zone" during the ambush.[23]

Halliburton in the media

  • Iraq for Sale: The War Profiteers is a 2006 documentary by Robert Greenwald.
  • The War Tapes is a 2006 documentary filmed by actual soldiers during their deployment in Iraq. Notably, Halliburton is mentioned to be charging the USA $28 each for the disposable picnic plates given to the soldiers in the mess hall that their meals are served on.
  • In Marvel Comics' Fantastic Four Halliburton has received many of the no-bid contracts for the repair of the Baxter Building. Reed Richards said that they overcharged for the work.[24]
  • Halliburton was mentioned in the Jib Jab shortie "Good to be in D.C." with the lyrics "I wish my winnings were a bit more certain, I better call my friends at Halliburton" sang by a George W. Bush impersonator.
  • In the Faithless song Mass Destruction the lyrics "Whether Halliburton, Enron or anyone, greed is a weapon of mass destruction".

See also

References

  1. ^ a b "Halliburton Announced Full Year and Fourth Quarter Results" - Halliburton.com - 2007-01-26 - (Adobe Acrobat *.PDF document)
  2. ^ "Halliburton Opens Corporate Headquarters in the United Arab Emirates" - 2007 Press Releases - at Halliburton.com - March 11, 2007
  3. ^ "Halliburton to Move Headquarters to Dubai" - All Things Considered - NPR - March 12, 2007
  4. ^ Steffy, Loren. "Halliburton heralds Houston's hereafter" - Houston Chronicle - March 14, 2007
  5. ^ Steffy, Loren. "Sound Off: Halliburton's Dubai kiss" - Houston Chronicle - March 14, 2007
  6. ^ "Halliburton Completes Separation of KBR" - 2007 Press Releases - Halliburton.com - April 5, 2007
  7. ^ http://www.halliburtonwatch.org/about_hal/asbestos.html
  8. ^ a b Yeoman, Barry (2003-06-01). "Soldiers of Good Fortune". Mother Jones. Retrieved 2007-05-08. {{cite news}}: Check date values in: |date= (help)
  9. ^ http://www.motherjones.com/news/outfront/2004/01/12_400.html
  10. ^ "Halliburton's Iraq role expands". BBC News. 2003-05-07. Retrieved 2006-04-28. {{cite news}}: Check date values in: |date= (help)
  11. ^ a b York, Byron (July 14, 2003). "Halliburton: The Bush/Iraq Scandal that Wasn't". National Review. Retrieved 2006-04-28. {{cite journal}}: Check date values in: |date= (help)
  12. ^ http://www.theage.com.au/articles/2003/05/10/1052280472817.html
  13. ^ http://www.chron.com/cs/CDA/ssistory.mpl/business/1902750
  14. ^ "Halliburton Opens New Facility in Southwest Wyoming" - 2004 Press Releases at Halliburton.com - October 28, 2004
  15. ^ http://www.halliburton.com/default/main/halliburton/eng/news/source_files/news.jsp?newsurl=/default/main/halliburton/eng/news/source_files/press_release/2006/kbrnws_012406.html
  16. ^ http://counterpunch.org/lindorff07272007.html
  17. ^ http://library.corporate-ir.net/library/67/676/67605/items/199968/KBR_S1.pdf
  18. ^ http://news.bbc.co.uk/1/hi/world/middle_east/3628069.stm
  19. ^ http://www.nytimes.com/2006/10/25/world/middleeast/25reconstruct.html
  20. ^ http://www.guardian.co.uk/international/story/0,3604,1150320,00.html
  21. ^ a b c "Kerry Ad Falsely Accuses Cheney on Halliburton". FactCheck.org. September 30, 2004. Retrieved 2006-04-11. {{cite web}}: Check date values in: |year= (help)CS1 maint: year (link)
  22. ^ http://blogs.abcnews.com/theblotter/2006/09/exclusive_us_tr.html
  23. ^ http://www.mnf-iraq.com/index.php?option=com_content&task=view&id=6056&Itemid=18
  24. ^ McDuffie, Dwayne (2007). Fantastic Four (541). {{cite journal}}: Cite has empty unknown parameter: |quotes= (help); Missing or empty |title= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help); Unknown parameter |month= ignored (help)
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Editorials from Halliburton Executives

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