Halliburton Expands Mideast Presence;
CEO to Spend More Time in Dubai
By RUSSELL GOLD and SUSAN WARREN
March 11, 2007 2:44 p.m.
Halliburton Co. is making a big push to expand its presence in the Middle East, with Chief Executive Officer Dave Lesar spending a substantial part of his time running the company from Dubai in the United Arab Emirates.
Mr. Lesar said that from his Dubai office he will be concentrating on building the Houston-based oil-services company's business with national oil companies in the Eastern Hemisphere, including Asia, Africa and the Middle East. "Growing our business here will bring more balance to Halliburton's overall portfolio," Mr. Lesar said in a statement. (Read the company's full statement1)
Halliburton's decision is another sign of shifting alignments in the global oil order. While Houston remains the center of the global oil trade among Western companies, Dubai in recent years has grown as a rival -- a hub for trade, investment and oil-patch deals, especially for national oil companies expanding outside their home turf. Dubai's location in the Middle East puts it close to the world's richest oil reservoirs, and it has proven itself more open and friendly to Westerners than some of its neighbors.
Halliburton needs to make up ground it has lost in recent years to Western competitors and increasingly ambitious Chinese oilfield-service firms. Halliburton operates in 70 countries with about 45,000 employees. The company -- and its red-clad workers -- is the dominant oilfield-service company in North America, generating 60% of its operating income, or $2.03 billion, last year in the region.
But North America is a mature oilfield province and most of the industry's growth is occurring elsewhere. Halliburton reported a 40% decline in fourth-quarter net income, with a drop in North American revenue heightening concerns about a slowdown in drilling.
Meanwhile, Halliburton's competitors are more dominant outside of North America. Many of the worlds' best new oil and natural gas production opportunities are in oil-rich regions of the Middle East and Africa, while much of the growth in demand is coming from Asia.
Schlumberger Ltd., the largest oilfield-service firm by revenue, earned two-thirds of its net income from continuing operations last year, or $3 billion outside of North America.
Halliburton has faced numerous distractions in recent years that have taken its attention away from its core oilfield-services business. It paid a steep price to extricate itself from enormous damages in asbestos litigation and avoid bankruptcy for the entire firm. Then a logistics contract for the U.S. military ballooned unexpectedly, taxing the company's ability to keep pace with demands of the Iraq war. Halliburton recently took steps to complete its spin-off of KBR Inc., its logistics and engineering division, in order to focus on its dominant oilfield business.
I just copied the above from the WSJ online edition. Bloomberg is reporting this as Halliburton opening a regional head off in Dubai from which the CEO will spend most of his time. I'm skeptical that this has anything to do with evading investigators.
