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Overview of the Business

Halliburton Company
1401 McKinney
Houston, TX 77010

IRS Number: 752677995

Standard industrial classification: Oil, gas field services, NBC (1389)

Former name: Halliburton Oil Well Cementing Company

Date of name change: Sept. 11, 1966

Shares of common stock outstanding on February 27, 2004: 439,713,236

Halliburton's predecessor, Brown & Root, was established in 1919 and incorporated in Delaware in 1924. Two brothers, George and Herman Brown, and their brother-in-law, Dan Root, started the firm by paving roads. It was basically a cement company and nothing more. But the brothers soon began manufacturing complex oil platforms, dams and Navy warships.

While the Brown and Root brothers started off in Houston paving roads with cement, another man, Earl Halliburton of Tennessee, was working on a new process known as "oil well cementing." Although Earl Halliburton's former employer invented oil well cementing, it was Mr. Halliburton who made it a lucrative and popular method for extracting oil. The process involves sending cement down an oil well to create a wall to seal-out water and other unwanted contaminants. The oil well cementing process, still used today, stabilizes the oil well and thereby allows drillers to extract oil more easily and efficiently.

In 1962, Halliburton Company purchased Brown & Root. At the time, Halliburton was a booming oil-well construction and services firm. By the late-1960s, Brown & Root, along with four other companies, built 85 per cent of the infrastructure needed by the Army during the Vietnam War. During the war, protesters and soldiers in Vietnam referred to the company as "Burn & Loot."

The arrival of Dick Cheney as CEO in 1995 was, by far, the best decision Halliburton ever made. Under Cheney's tenure as CEO, Halliburton's revenue from federal government contracts nearly doubled. Government-backed loans from the Export-Import bank increased from $100 million to $1.5 billion. The company became the 18th-largest defense contractor, in terms of revenue, whereas before Cheney's arrival the company was the 73rd largest contractor.

Halliburton saw its revenue increase 30 percent to $16 billion in 2003, largely because of its military contracts in the middle east. Halliburton was the number one U.S. Army contractor in 2003 with the total value of its Army contracts valued at $3,731,725,648. Dan Briody, in his book The Halliburton Agenda, described Halliburton's relationship with Cheney as "the embodiment of the Iron Triangle, the nexus of the government, military, and big business that President Eisenhower warned America about in his farewell speech."

Halliburton and its subsidiaries had for years manufactured construction products that contained asbestos, which was later found to cause scarring of the lung tissue and lung cancer. In 2003, Halliburton had a net income loss of $820 million (or -1.88 per share) because of bankruptcies related to its exposure to asbestos liability. A settlement of Halliburton's asbestos lawsuits was executed in 2004 and the company subsequently became profitable again.

Halliburton's 101,000 employees are spread across more than 120 countries and operate under two business segments: (1) Energy services and (2) Engineering and construction.

Energy Services Group

Under the Energy Services group, Halliburton provides various services to corporations for the exploration, development and production of oil and gas.

Sperry-Sun: The Sperry-Sun division provides directional and horizontal drilling for oil and gas, measurement-while-drilling, logging-while-drilling, multilateral wells and related completion systems, and rig-site information systems.

Security DBS: The Security DBS division sells drill bits used for drilling oil and gas, including cone rock bits, fixed cutter bits, coring equipment and other downhole tools.

Magnetic Resonance Imaging Logging (MRIL): Halliburton's logging and perforating products include technology for photographing and visualizing subsurface rock formations in newly drilled oil and gas wells.

Baroid Drilling Fluids: Provides fluid management and technologies to assist in the drilling and construction of oil and gas wells. Their technology cements and bonds together the well and well casing in order to stabilize the well. Cement and chemical additives are pumped to fill the space between the casing and the side of the well. Drilling fluids also help cool the drill bit, seal porous well formations and assist in pressure control within the well.

Enventure Global Technology, LLC (Enventure): This joint venture between Halliburton and Shell Technology Ventures expands upon Halliburton's Baroid fluids business. Halliburton owns 16.5 percent of the joint venture while Shell owns the remainder.

Production Optimization Business Segment: Provides the means to improve well production once a well is drilled. After testing and measuring the output of oil and gas wells, Halliburton provides the services to optimize oil and gas reservoirs. Optimization is achieved through a variety of pressure pumping services, including fracturing and acidizing, sand control, coiled tubing, hydraulic workover and pipeline and process services. These services are used to clean out a formation or to fracture formations to allow increased oil and gas production. Included in this business segment is Subsea 7, Inc.

Landmark Graphics: Provides oil and gas production software, consulting services, real-time operations, smartwells and other integrated solutions. Computer software analyzes seismic, well log and other data to provide a detailed computer model of petroleum reservoirs. Landmark Graphics is the leading supplier of exploration and production software. It also provides data management services for the upstream oil and gas industry. WellDynamics is included in this business segment and is 51 percent-owned by Halliburton, 49 percent by Shell.

Magic Earth, Inc. offers 3-D technology to allow companies to interpret and visualize seismic data. Halliburton bought the company in April 2001 for $100 million.

PES (International) Limited, based in Aberdeen, Scotland, provides technology that complements Halliburton Energy Services' real-time reservoir solutions.

WellDynamics is a joint venture between Halliburton and Shell Technology Ventures, BV.

PGS Data Management was purchased in 2001 from Petroleum Geo-Services ASA (PGS) for $164 million.

Subsea 7, Inc. (formerly Halliburton Subsea 7) is a joint venture between Halliburton and DSND, Inc. with each company owning 50 percent.

Engineering and Construction Group

The engineering and construction group is operated by Halliburton's KBR subsidiary. It consists of five product lines: (1) Onshore operations involve engineering and construction of oil refinery and natural gas plants, (2) Offshore operations include deepwater engineering, marine technology and fabrication capabilities, (3) Government operations include military logistics, maintenance and operations activities for government facilities and installations, (4) Operations and maintenance services for oil, gas and petrochemical companies and (5) Infrastructure provides civil engineering, consulting and project management services.

KBR provides logistics support for the United States government, especially the military. Its business with the military includes maintenance of military bases and equipment, construction of housing, prisons and other facilities as well as providing food service, laundry operations, and shuttle bus and cargo shipping services throughout the area of military operations. KBR is also rebuilding the oil infrastructure in the southern part of Iraq.