Lehman Energy Conference

Transcription

1 Lehman Energy Conference September 2008 Dave Lesar Chief Executive Officer Mark McCollum Chief Financial Officer

2 The statements in this presentation that are not historical statements, including statements regarding future financial performance, are forward-looking statements within the meaning of the federal securities laws. These statements are subject to numerous risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the results expressed or implied by the statements. These risks and uncertainties include, but are not limited to: consequences of audits and investigations by domestic and foreign government agencies and legislative bodies and related publicity; potential adverse proceedings by such agencies; protection of intellectual property rights; compliance with environmental laws; changes in government regulations and regulatory requirements, particularly those related to radioactive sources, explosives, and chemicals; compliance with laws related to income taxes and assumptions regarding the generation of future taxable income; unsettled political conditions, war, and the effects of terrorism, foreign operations, and foreign exchange rates and controls; weather-related issues including the effects of hurricanes and tropical storms; changes in capital spending by customers; changes in the demand for or price of oil and/or natural gas; impairment of oil and gas properties; structural changes in the oil and natural gas industry; increased competition for employees; availability of raw materials; and integration of acquired businesses and operations of joint ventures. Halliburton's Form 10-K for the year ended December 31, 2007, Form 10-Q for the quarter ended June 30, 2008, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss some of the important risk factors identified that may affect the business, results of operations, and financial condition. Halliburton undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

3 1 A Vigorous but Variable Market

4 Industry Dynamics Supply / Demand Balance Accelerating Depletion Rates Reserve Replacement Treadmill Reserve Location Dynamics Changing Reservoir Characteristics Access to Capital 2

5 Supply / Demand Balance 2007 Oil production dropped 0.2% while demand increased 1.1% Oil Production Change Oil Demand Change Top 20 Producing Countries (Represents 85% of total world production) -242K bpd Rest of World +116K bpd China Rest of World Brazil India Saudi Arabia Approx 80% of total demand increase (990K bpd) driven by four countries Source: BP Statistical Review

6 Accelerating Depletion Rates 4000 Non-OPEC and Non-FSU Crude Production and Depletion Curve Norway 36, , ,000 30, United Kingdom 28, , , Mexico Source: BP Statistical Review

7 Reserve Replacement Treadmill Combined peak production of five major projects needed to make up decline in Cantarell Production decline in Cantarell since 2004 peak Estimated peak production of five projects 5-1,155K bpd ,180K bpd 180K bpd Roncador (Brazil) K bpd Atlantis (Brazil) K bpd Tengiz (Kazhakhstan) K bpd 200K bpd Thunder Horse (GOM) Buzzard (UK) Source: Non-OPEC shortfalls again, Simmons Energy Research Report 5

8 Reserve Location Dynamics Top 20 countries by oil reserves Most hydrocarbon reserves are located outside North America and access to these reserves is getting more limited. (billion barrels) Non-North America North America 11% 6% 6% NOC - no equity access NOC - limited access 77% Full IOC access Reserves held by new Russian companies 0 Source: BP Statistical Review 2008, PFC Energy 6

9 Changing Reservoir Characteristics The Next Trillion Barrels Will Be Harder to Access In More Complex, Smaller Accumulations More Deeply Buried Reservoirs Heavier More Costly Discovered with Fewer Experienced Resources Exploration Field Planning & Development Production 7

10 Access to Capital Split of global listed oil and gas sector by market cap ($ billions) 5,000 $4.4 Trillion 4,000 3,000 2,000 1,000 0 Source: PFC Energy $1.1 Trillion Others Petrobras Gazprom PetroChina Supermajors 8

11 Halliburton Response to the Industry Dynamics Adapting to Changes in Customer Mix Improving Our Ability to Handle Increased Volume Addressing Growing Levels of Service Intensity Leveraging Worldwide Infrastructure Developing New Technology for Tomorrow s Reservoirs Expanding Our Human Capital Enhancing Our IPM Capabilities 9

12 Improving Our Ability to Handle Increased Volume ($ millions) 5,000 Activity increased at a 20% compounded annual growth rate since 2004 Revenue at 2004 price levels CAGR 20% 2,500 0 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q

13 Addressing Growing Levels of Service Intensity Worldwide revenue per rig has grown approximately 18% compounded annually since 2005 ($ thousands) 1,600 Revenue per rig 1,400 1,200 CAGR 18% 1, Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Q107 Q207 Q307 Q407 Q108 Q208 11

14 12 Leveraging Worldwide Infrastructure

15 Developing New Technology for Tomorrow s Reservoirs Improved Modeling / Visualization to Reduce Risk in More Complex Accumulations Improve Net Recovery Factors from Old and New Fields Reliable Access to Deeply Buried Reserves Unlocking Tight Gas and Heavy Oil: Making the Unconventional Conventional Creating Efficiency Models Integrated with the Digital Asset Platform 13

16 Digital Asset Platform Integrated with Operations and Technology Portfolio Digital Asset A real-time collaborative environment to model, measure and optimize the asset New Product Revenue NPR as % of total revenue 38% for 2007, highest ever 7 New Product Revenue 6 ($ in billions)

17 Expanding Our Human Capital 92% Nationalized United States 45% 89 United Nations States55% 45% Worldwide Employment 36K 55K E Global Training and Competency Standards 15

18 Enhancing Our IPM Capabilities Evolving Contract Models Discrete Services Packaged Services Integrated Projects Single Service Lines Multiple Services Project Management Multiple Services Project Management Rig Management Well Engineering Third Party Perform jobs Provide efficient service models Deliver a completed well 16

19 Well Positioned for Growth Capitalizing on Industry Trends Entering the Next Phase of Growth Robust Technology Portfolio 17

20 Financial Overview Financial Implications of Contract Models Strong Financial Performance Valuation Inconsistency Convertible Debt Redemption 18

21 Financial Implications of Contract Models Approximately 30% IPM projects represent less than 5% of total revenues Less than 5% Implications of Packaged Services: Risk consistent with Discrete Services Broad product offering creates competitive advantage Frequent technology upsell opportunities Implications of IPM : Greater risk Integrated Projects Packaged Services Discrete Services Proportion of third party revenues can dilute margins Limited upsell opportunities Nature of service impacts bidding strategy and pricing discipline 19

22 Strong Financial Performance 20% 18% 16% 14% Revenue Growth FY H % 18% 17% 16% 1H 2008 Revenue Breakdown 55% 45% 12% 10% HAL Peer Avg* HAL Peer Avg* International North America Operating Margins Return on Equity 25% 20% 15% FY H % 22% 21% 20% 40% 35% 30% 25% FY H % 28% 33% 24% 10% 20% 15% 5% 0% HAL Peer Avg* HAL Peer Avg* 10% 5% 0% HAL Peer Avg* HAL Peer Avg* * SLB, BHI, WFT, SII, BJS 20

23 Valuation Inconsistency Valuation gap unjustified based on growth, profitability, and return metrics P/E* 2009 P/E* HAL Peer Avg HAL Peer Avg * Based on consensus estimate as of August 26,

24 Convertible Bond Redemption HAL s 3.125% convertible senior notes became redeemable at HAL s option in July 30-day redemption notice issued July 29 th $1.2B principal was settled in cash $1.7B premium was settled: $.7B in cash $1.0B in stock from treasury Non-operating charge of $700 million in Q Long-term refinancing of some or all of the principal amount 22

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