12 March 2007The Boston Globe
Halliburton Co., the world's second-largest oilfield-services provider, will move chief executive David Lesar to a new corporate headquarters in Dubai to help the company expand in the Middle East and Asia.
The move is part of an effort to shift business outside North America, which provided 55 percent of Halliburton profit last quarter, and to court national oil companies that pump most of the oil in the Middle East. The company will keep a corporate office in Houston, where it has its headquarters today, the company said in a statement.
"Growing our business here will bring more balance to Halliburton's overall portfolio," Lesar, 53, said in the statement. "This is a market that is more heavily weighted toward oil exploration and production opportunities."
Dubai is on the Persian Gulf and is part of the United Arab Emirates, the fourth-biggest OPEC crude-oil producer.
The move will not affect Halliburton's legal status as a US company, spokeswoman Melissa Norcross said in an e-mailed statement.
"As companies usually refer to the CEO's office as the corporate headquarters, that's what we are doing," Norcross said. "We will maintain our company's legal registration in the United States, and we are not leaving Houston."
Lesar is freer now to focus on expanding the company's oil services than at any time since he took over the chief's job in 2000. He has brought the company through a settlement of asbestos litigation and has almost completed the spinoff of the company's KBR Inc. engineering and government contracting unit.
As the biggest US contractor in Iraq, KBR was a magnet for critics who said it was overcharging and getting special treatment because the company used to be run by Vice President Dick Cheney.
Halliburton is the largest energy-services company in North America, a region dominated by natural-gas drilling. The average US natural-gas price slipped 23 percent last year from 2005, based on benchmark New York futures.
Concern that Halliburton's profit will be hurt by lower gas prices in North America have helped push the stock down about 4.4 percent in the past year. Rival Schlumberger Ltd., which dominates the oil-intensive international markets, rose 11 percent during the same period.
"One of the arguments that Halliburton's competitors would use against them is that they're US-focused," said Roger Read, an analyst with Natexis Bleichroeder Inc. in Houston who doesn't rate the stock and who owns fewer than 500 shares. "Now they can say, 'Hey, look at our CEO. He's over here.' "
North America accounted for $525 million of Halliburton's $959 million in fourth-quarter profit from oilfield services. In North America, the number of rigs drilling for natural gas in the quarter rose 5.2 percent. The company continues to be able to raise prices in North America, Lesar said in a Jan. 26 conference call.
The company said in the statement that the Dubai headquarters was also part of a strategy, adopted last year, to boost its relations with national oil companies.
In an interview last June, Lesar said many national oil companies bypassing partnerships with companies such as US-based Exxon Mobil Corp. were looking to the oilfield-services companies to manage projects.
Halliburton and other top oilfield-services companies can provide much of the technology and expertise that the international oil companies controlled in the past, Lesar said.
"The national oil companies have gotten much more sophisticated in terms of the types of projects they believe they can take on," Lesar said at the time. Because of that, he said, "our customer base is changing a bit."
Shares of Halliburton rose 29 cents to $32.02 on March 9. The stock has declined 24 percent since reaching a 52-week high of $41.99 last April.
