Halliburton Company (HAL)

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Halliburton Company (HAL)

UBS Global Oil and Gas Conference

May 21, 2013 08:30 am ET

Executives

Mark McCollum – Executive Vice President & Chief Financial Officer

Analysts

Angie Sedita – UBS Securities

Presentation

Angie Sedita – UBS Securities

Alright, good morning and welcome to UBS’ Global Oil and Gas Conference. Our first presenter is Mark McCollum who is Executive Vice President and Chief Financial Officer of Halliburton, a position he’s held since January, 2008. Prior to that he had been the Senior Vice President and Chief Accounting Officer of Halliburton from 2003 to 2007.

We believe Mark has been part of one of the very best management teams in the oil service sector today, and we’re very pleased to have Mark and Halliburton here to kick off the UBS Global Oil and Gas Conference.

Mark McCollum

Thanks, Angie, and good morning everyone. It’s great to see you in Austin, Texas. I always enjoy when the conferences are a little closer to home. And so it’s a well-attended conference – I always enjoy coming over for this and we appreciate the welcome that UBS has for us.

I’m going to spend a few minutes this morning talking a little bit about some strategic initiatives we’re working on this year to try to give you a little bit more insight into how we’re thinking about margins and things going forward. And I also want to spend a few minutes updating activity, sort of walk around the world and talk about where things stand in Q2 and as we look out over the rest of the year; and then close with some time for questions.

Obviously do take an opportunity to read our Safe Harbor language, that there will be some forward-looking statements that I’ll make today – just don’t hold me to them in case they turn out otherwise.

We have for a long period of time been articulating what our strategic growth drivers have been for our business. As we look at the market going over the next decade, decade and a half, we are very, very confident inside of Halliburton that there are three key areas where our business is going to grow more than other places. And it’s where we’re putting our investment dollars, it’s where we focus our technology, it’s where we focus our sales efforts. Those three areas are deepwater, unconventionals, and mature fields.

Everything that we’ve done and everything that we will do over the next several years will relate to these key drivers. We believe that they’re going to be the fastest growing areas. Clearly deepwater, the market itself not only has been growing but as we look ahead through the rest of 2013 and 2014 there are a huge number of deepwater rigs that are coming into the market. This is where we have focused a lot of our market share aims in terms of growing our international market share.

Our goal has been to grow 25% faster than the deepwater market overall. We believe that we have been successful in that effort. We will continue to try to grow that in that particular area. Why? Because deepwater is much more service-intensive than other areas and provides a higher margin and higher technology opportunities in other areas.

Unconventionals, that’s been the story in North America but we think over the next five to ten years will be the story of the international markets as well as unconventional gas begins to take off in certain key markets. Because we’re the unconventional leader in North America we believe that it’s an important strategic thrust for us to continue to expand our presence, to be ready to work for customers around the world in unconventionals.

And then in the mature fields area, while we’ve expanded our portfolio of businesses and assets to work in those areas we think over time as the oil and gas reserves around the world get increasingly more difficult to find more and more of our customers are going to go back in to try to look at mature field redevelopment – the ability to enhance production. And it plays very much into our other portfolio of assets in the production enhancement area, hydraulic fracturing, completions and other areas.

So we’re going to continue to grow our portfolio to address mature fields. While it’s still a relatively small percentage of our overall business each and every year it’s growing and we hope within the next year or so it will reach up to about $3 billion of our revenue base and grow from there.

Because we’ve been targeting these specific areas we believe that that’s been providing some success for us in terms of our growth relative to our peers. And I put this slide up – it’s not a new slide, we’ve seen this, but both in North America as well as international you look back over the last three years we’ve been the fastest growing entity in the service base. This is compared to our two primary competitors.

This has been largely obviously driven by those strategic thrusts, not just in North American in the unconventionals but in the international space by targeting and winning share in the deepwater market. And as you can see on an index basis we think that we’ve been growing much more dramatically than our peers and we’re poised to continue to do this based on these key strategies.

We also have been providing the highest returns in the peer group, and whether you measure it on a return on capital employed or whether you look at it on a TSR, total shareholder return basis we believe we’ve been providing leading shareholder returns over that period and are very proud of this particular fact – particularly you know, it’s driven on our part we think by a better level of capital discipline and cash flow discipline.

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