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Houston Chronicle: Though CEO leaving for Mideast, he says city is still key

by Brett ClantonHouston Chronicle
May 17th, 2007

Halliburton Co.'s new corporate headquarters in Dubai will be a key beachhead for the oil-field-services giant as it pursues business in the Eastern Hemisphere, but the company will probably always have a bigger presence in Houston, Halliburton CEO Dave Lesar said Wednesday.

"You look at what drives our employee base here. It's a lot of our research, it's a lot of our manufacturing, the people who are running some of our regional businesses in the U.S., and it's a lot of our backroom operations," Lesar told reporters after Halliburton's annual shareholders meeting in The Woodlands.

"We will continue to have a great and large employee base here."

Halliburton, with roughly 5,000 employees in Houston, announced in March it would open a dual headquarters in Dubai and put Lesar there to run it. The move is designed to help Halliburton boost sales with state-owned oil companies in the resource-rich Eastern Hemisphere.

But the plan has drawn criticism from some lawmakers who view it as a way to dodge U.S. taxes and ongoing investigations or to skirt federal laws that bar American firms from doing business directly with sanctioned countries like Iran.

The move to the United Arab Emirates was mostly a non-issue at the meeting Wednesday. But Pratap Chatterjee, a shareholder and longtime critic, did ask if Halliburton and Lesar himself would receive any tax benefits as a result of the move.

"Halliburton has been and will continue to be a U.S. company and therefore a U.S. taxpayer," Lesar said. "I personally will remain a U.S. citizen and a U.S. taxpayer."

Not speaking of KBR

Lesar was also asked what will become of allegations that Halliburton overbilled the Pentagon for non-combat services in Iraq now that it has cut ties with KBR, the largest U.S. contractor in Iraq.

"That question is really best addressed to KBR," he said. "We no longer speak on behalf of KBR."

After first raising the idea in 2004, Halliburton finally broke ties in April with KBR, which had been a drag on the company's image and earnings.

Robert Stewart, 79, a Halliburton shareholder from Shreveport, La., applauded the move after the shareholder meeting Wednesday.

"Now that they've divided, I think it's better for both companies," he said. Even so, he said he will not invest more in Halliburton until it has had more time on its own after the split.

Halliburton reported a record $2.3 billion in profit last year and continues to be the dominant oil-field service company in North America, where it generates 60 percent of its operating income.

Over the last several years, however, an increasing amount of Halliburton's business has shifted to places like Kuwait, Russia, Libya and west and central Africa. Its customer base is also shifting from Western oil companies to national oil companies in developing nations.

"We have to go to work where the business is," Lesar said. He said he will leave this week for Dubai and is looking forward to living in the United Arab Emirates.

Mock going-away party

But a couple dozen protesters gathered outside the annual meeting Wednesday at The Woodlands Resort and Conference Center to blast Halliburton for the move to Dubai and other issues.

Wearing red party hats and blaring Take the Money and Run, they held a mock going-away party for the company as shareholders pulled away from the secluded resort. Before the meeting, they were herded into a "free expression" area on the far side of a parking lot from the conference center.

Because hundreds of protesters have shown up at past Halliburton meetings, security was out in force. Police officers and security guards from the company and resort far outnumbered the demonstrators this year.

Jeff Grubler, who helped organize the protest, said the smaller numbers do not mean there is any less criticism of Halliburton. Peace groups are just spread thin across many campaigns, including protests against the war in Iraq.

After the meeting, Halliburton's board of directors approved a 20 percent increase in the company's quarterly dividend to 9 cents per share. It also declared a second quarter dividend on common stock that will be paid in June.



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