Overview of Halliburton For Jane Smith, ABC Corporation Research by: Cadence Group cg-research

1. Information is our Forté Overview of Halliburton For Jane Smith, ABC Corporation  Research by: Cadence Group http://www.cg-research.com 1095 Zonolite Road, Suite 105, Atlanta, GA 30306 (404) 874-0544 May 5, 2003 COPYRIGHT STATEMENT - All material obtained is for research purposes only and is subject to the conditions and restrictions as stated in the U.S. Copyright and Intellectual Property Laws. US Copyright OfficeUS Copyright LawDigital Millennium Copyright Act Cadence Group - Confidential & Proprietary

2. Halliburton Overview • Headquartered in Houston, Texas • Founded in 1919 • 85,000 employees in more than 100 countries worldwide • One of world’s largest oil field services companies, along with Schlumberger • Two major operating groups: • Energy Services Group provides products and services to upstream oil & gas customers • Engineering & Construction Group (known as Kellogg, Brown & Root, or KBR) designs and builds plants, facilities and pipelines for the oil & gas industry; also works on civil infrastructure projects for governments & other customers • Source: Halliburton and Hoover’s, 2003 Cadence Group - Confidential & Proprietary

3. Halliburton Consolidated Statement of Operations 2002 Source: Halliburton, 2003. Cadence Group - Confidential & Proprietary

4. Halliburton Financial Statements Comparison 2002 to 2001Source: Halliburton, 2003. Cadence Group - Confidential & Proprietary

5. Halliburton Financial Statements Comparison 2001 to 2000 Source: Halliburton, 2003. Cadence Group - Confidential & Proprietary

6. Halliburton Debt and Lease Payments, 2003-2007 Source: Halliburton, 2003. Cadence Group - Confidential & Proprietary

7. Lower natural gas & crude oil drilling activity since Q3 2001 resulted in decreased demand for services & products of Halliburton’s Energy Services Group. Yearly and quarterly average rig count based on Baker Hughes Inc. Rig count information appears at right. Source: Halliburton, 2003. Cadence Group - Confidential & Proprietary

8. Halliburton – Global Operations: Key Trouble Spots • United States33% of 2002 revenues • Company’s ties to political establishment could pose problems for Halliburton both in the U.S. & around the world, as anti-American sentiment grows due to homeland security crisis. • Middle East regionIndefinite, yet sizable percentage of 2002 revenues • The armed conflict in the Middle East will have a unpredictable impact on company’s operations throughout region & worldwide. • Nigeria, Africa~ 2% of 2002 revenues • Due to rising levels of civil disturbance, a number of Halliburton’s customers have ceased operations in Nigerian Delta region • Venezuela, South America< 2% of 2002 revenues • Current economic & political instability will negatively impact company’s operations there until resolved. Cadence Group - Confidential & Proprietary

9. Halliburton SWOT Strengths Weaknesses • - Weakening financials, due in part to asbestos/silica claims* • Operates in capital-intensive fields of energy, engineering, and • construction • Much of its work based on “as needed, where needed” contracts • Labor volatility relative to politics, social unrest, terrorism - Operations in 100+ countries - Diverse base of private/public clients - In 2002, only 1/3 of its business came from U.S - Only 5% of workforce unionized. Opportunities Threats • Could devote more funding to research & development • Could benefit from ties to Bush Administration • Will likely benefit from global security/defense issues • Potential savings/efficiencies from restructuring • - Perceived questionable role in landing government contracts • Subject to rigid environmental regulation • Instability of global economy, relative to terrorism • Competitors may benefit from company’s exit from • riskier, fixed-price energy contracts • * See next slide. Cadence Group - Confidential & Proprietary

10. Halliburton: Asbestos/Silica Claims, Part I • On Dec. 18, 2002, Halliburton announced agreement toward global settlement of asbestos/silica personal injury claims against DII Industries LLC; Kellogg, Brown & Root Inc.; & current/former subsidiaries: • Up to $2.775 billion in cash, and • 59.5 million Halliburton shares (valued at $1.1 billion, using Dec. 31, 2002 stock price of $18.71) & notes with a net present value of <$100 million be paid to a trust for benefit of current/future asbestos & current silica personal injury claimants. • DII & KBR retain rights to first $2.3 billion of insurance proceeds, with any proceeds received between $2.3 billion-$3.0 billion going to trust. Cadence Group - Confidential & Proprietary

11. Halliburton: Asbestos/Silica Claims, Part II • As of March 2003, DII & KBR finalized this agreement, & • Halliburton agreed with Harbison-Walker & asbestos creditors committee in H-W bankruptcy to extend period of stay in Bankruptcy Court's temporary restraining order until July 21, 2003. • The order, originally entered on Feb. 14, 2002, stays more than 200,000 pending asbestos claims against DII. • If pre-packaged Chapter 11 filing by DII, KBR, & subsidiaries is not made by July 14, 2003, the Bankruptcy Court will hear motions to lift stay on July 21, 2003. Cadence Group - Confidential & Proprietary

12. Halliburton: Exiting Riskier Fixed-Price Contracts • As part of 2002 reorganization, Halliburton decided to no longer pursueriskier fixed-price engineering, procurement, installation & commissioning contracts for offshore oil & gas industry. • The company says these contracts use a disproportionate share of their bonding & letter of credit capacity relative to its profit contribution. • Halliburton will continue to provide a range of engineering, fabrication & project management services to the offshore industry--which it will do through a variety of other contracting forms. • At the beginning of 2003, Halliburton had 7 fixed-price engineering, procurement, installation & commissioning offshore projects under way. The company said it would complete all of them. • Halliburton plans to retain its offshore engineering & services capabilities. Cadence Group - Confidential & Proprietary

13. Halliburton: Oil Field Services Revenues • North American revenue decreased 24%across all product service lines due to lower rig activity. • Latin American revenue decreased 8% primarily as a result of decreases in Argentina due to currency devaluation & in Venezuela due to lower activity brought on by uncertain market/political conditions & a national strike. • Revenues increased in: • Europe/Africa • the Middle East • Asia Pacific due to increased activity. Cadence Group - Confidential & Proprietary

14. Halliburton: Engineering & Construction Revenues • Offshore revenues increased 26% due to progress on Barracuda-Caratinga project in Brazil and Belenak project in Indonesia. • Infrastructure revenues increased by 22% due to progress on Alice Springs to Darwin Rail Line project in Australia and revenues from Europe/Africa. • Onshore revenues increased by 25% primarily due to progress on new projects in 2002, including gas and LNG projects in Algeria, Nigeria, Chad, Cameroon & Egypt. • Government Operations revenues were 15% lower due to completion of a major project at company’s shipyard in the U.K. and lower volumes of logistical support in the Balkans. • Operations and Maintenance revenue declined 3% primarily due to reduced downstream maintenance activity. Cadence Group - Confidential & Proprietary

15. Halliburton: Key Findings / Outlook Halliburton lies at an interesting crossroads today: • Its former Chief Executive Officer (Dick Cheney) now occupies the Vice Presidency of the U.S. • The Texas-based company will continue to benefit from its ties to government and energy, especially if the Republican Party maintains its strength in the U.S. • Increased anti-terrorist/homeland security issues will likely fuel revenues for the global firm, for the foreseeable future. Cadence Group - Confidential & Proprietary