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HALLIBURTON

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HALLIBURTON

Corporate Sustainability Report

It starts with me.

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Table of Contents

2Chief Executive’s Message

4Organization Pro� le

10Economic Pro� le

19Environment Pro� le

28Social Pro� le

Major Operating Hubs

12 in the Western Hemisphere14 in the Eastern Hemisphere

Previous Reports

ConnectingPublished in June 2006, forcalendar year 2004-2005

Corporate Sustainability Report 2006Calendar year 2006

Current ReportCalendar year 2007

Report Parameters

Reporting period:Calendar year 2007

Date of most recent previous report: 2006

Reporting cycle:Annual

For more information or additional copies, please contact:

Halliburton Global Sustainable Development Manager1401 McKinney Street, Suite 2400Houston, Texas 77010United States

[email protected]

Boundary of the report: All countries, product service lines, joint ventures and non-wholly- owned subsidiaries are included in � nancials only.

Global Reporting Initiative Index

Strategy and Pro� le Strategy and Analysis 2, 6 Organizational Pro� le 4 Report Parameters inside back cover Governance 8 Signi� cant Performance Indicators 9

Economic Economic Performance 10 Market Presence 12 Indirect Economic Impact 15, 16

EnvironmentEnergy 23

Water 23 Emissions, E� uents, Wastes 23 Products and Services 23 Compliance 27

Social Labor Practices 30 Community 36 Human Rights 37 Product Responsibility 39

Halliburton believes

that sustainability issues are key drivers

for our business, and we’re taking steps to incorporate

this mindset into all of our business practices.

We hope that, through educating our employees

on the business implications of sustainability,

they will be encouraged to pursue their own

individual sustainable endeavors.

A� er all, it starts with all of us.

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It isn’t just one thing.

“Sustainability” is a big word whose meaning broadens with

every use. It incorporates reducing environmental impacts,

increasing our local sourcing of goods and services, and corporate

governance. It has as many di� erent meanings as the diversity

of people who put it into practice on a personal level, and it has

many meanings for a company as vibrant as Halliburton.

We place a high priority on sustainable technologies, like our

hydraulic fracturing � uids developed especially for use in coalbed

methane and coal mine methane � elds. We build sustainable

relationships, as typi� ed by the training programs we o� er at our

Tyumen, Russia, training center in cooperation with the Tyumen

State University of Oil and Gas. Sustainable sourcing in developing

areas like Angola helps solidify our future and the futures of the

communities in the countries where we have a strong presence.

� e ongoing study, investment and vigor we dedicate to

sustainability have yielded outstanding results. Even our

sustainability “growing pains,” far from being discouraging,

motivate us to expanded thinking and bolder objectives.

� ank you for taking time to review this report. When

you � nish reading it, perhaps you will strengthen

your own commitment to sustainability.

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A variety of factors made 2007 a successful year for Halliburton.

We completed our separation from KBR to become a pure oilfi eld services company, a goal that had been in our sights for some time. Our company vision – to be the preferred upstream service company for the development of global oil and gas assets – looks ahead to expanding possibilities, even as we narrow our focus to Halliburton’s original enterprise.

Our sustainability strategy, with its emphasis on sustainable relationships, sourcing and technology, will play a central role as we proceed through 2008. Our accomplishments in locations such as Angola, Brazil and the U.K. have been outstanding, and, with an exceptional depth of commitment at every level of our organization, our sustainability record will continue to progress and, ultimately, to shine.

We have made tremendous strides toward our goal of increasing our business in the Eastern Hemisphere, with our activity there reaching a new high in the company’s history. Our growth in this region is supported by the opening in November 2007 of a new technology center in Pune, India; the launch of a new training center in Tyumen, Russia; and new manufacturing plants in Malaysia and Singapore. We look forward to a 2008 opening for our Singapore Technology Center.

We continue to focus on building the workforce we need to sustain the operational excellence our customers have grown to expect, and to continue the surge in our standard-setting technologies. We hired more than 13,000 people in 2007. With 38 percent of our workforce having less than two years of service, the eff orts of our Human Resources team to accelerate the development of every employee will help us continue to thrive even through what has been called the “Big Crew Change” – the retirement in the coming years of thousands of “baby boomers.”

It is with deep sorrow that we report four employee deaths in 2007. Our company takes an unyielding stance on safety: One is too many. Until every employee goes home safely every day, no year, no matter how fi nancially stellar, can be called an unqualifi ed success. We will honor our lost colleagues by challenging ourselves to be 100 percent free of such tragedies in 2008 and we will do everything possible, corporately and individually, to achieve that essential objective.

In keeping with the long-established wisdom that “what is past is prologue,” our successes in 2007 become the standards we will aim to exceed in 2008 and beyond. Achieving continued fi nancial performance for our shareholders, attracting and retaining top talent, developing technologies that advance the industry while contributing to our goal of sustainability – all these factors form the foundation for our company’s bright future.

A Letter from Dave LesarChairman of the Board,

President and Chief Executive Offi cer of Halliburton

2 Corporate SuStainability report 2007

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Corporate SuStainability report 2007 3

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Our organizational structure, which is built around our Eastern Hemisphere and Western Hemisphere regions (see inside front cover), enables decision-making based on factors specifi c to the local areas. In 2007, with the fi nalization of the split with KBR, we streamlined our operations into two divisions (down from three in 2006): the Completion and Production Division and the Drilling and Evaluation Division.

We call Houston, Texas, our hometown, with our corporate headquarters located there since 2003. In 2007, we added a second corporate headquarters in

Dubai, United Arab Emirates, and Dave Lesar our chairman, president and CEO resides and works there.

We do business in approximately 70 countries, with major operations in Algeria, Angola, Argentina, Australia, Brazil, Canada, China, Egypt, Indonesia, Mexico, Nigeria, Norway, Oman, Russia, Saudi Arabia, Th ailand, United Arab Emirates, the U.K., the U.S. and Venezuela. Like our dynamic industry, we are fully global, with over 50,000 employees from 121 diff erent countries, working on six of the seven continents and on the oceans in between.

Halliburton is an oilfi eld services company, adding value through the entire life cycle of oil and gas reservoirs. We provide services to upstream oil and gas customers worldwide, from locating hydrocarbons and managing geological data to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the fi eld.

Organization Profi le


Halliburton

Drilling and Evaluation Completion and Production

Security DBS Drill Bits

Baroid Fluid Services

Wireline and Perforating Services

Landmark

Sperry Drilling Services

Production Enhancement

Cementing

Completion Tools

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Our strategy is supported by three key elements:

Extend our historic leadership •in well construction, completion and production enhancement

Strengthen our competitive •positions in directional drilling, drill bits, drilling fluids, and wireline and perforating services

Enhance global competitive strength •with meaningful acquisitions that provide a competitive advantage in key market segments and balance our portfolio in terms of geography and product lines.

Several significant achievements in 2007 reflect the momentum already generated by our new strategic focus:

Looking to the east – To strengthen •our presence in the Eastern Hemisphere, we established our second corporate headquaters in Dubai, United Arab Emirates. The oil and gas business is moving its focus from the increasingly difficult reserves of the Western Hemisphere to the bounty of the Eastern Hemisphere. As the customers we serve make this shift, we are expanding eastward to give us new manufacturing capacity; to move us closer to key markets; and to help reduce the cost of moving materials, products, tools and people.

Separation of KBR – On April 5, •2007, Halliburton announced that the final separation from KBR Inc. was completed. The two companies are separate and independent from each other, with all of the government services and engineering and construction businesses remaining with KBR. As a pure oilfield services company, Halliburton now can focus on the global growth opportunities in its core energy services business.

New technology center – We opened •a new technology center in Pune, India, enabling us to focus on our growth in the Eastern Hemisphere and to take advantage of the availability of exceptional local talent. This is the companys first globally focused technology center outside North America and Europe.

New manufacturing centers – We •opened new manufacturing facilities in Mexico, Brazil, Malaysia and Singapore. These facilities give us the local presence to capture growth in both mature markets and in key emerging markets within the Eastern Hemisphere for the foreseeable future.

Mergers and acquisitions – We •completed the acquisition of Calgary, Canada-based Ultraline Services Corporation, providing wireline services; OOO Burservice, a Russian directional drilling service company; and PSL Energy Services Limited, a U.K.-based well-intervention and pipeline services company.

Technology innovation – In 2007, •we were winners of three Hart’s E&P meritorious engineering achievement awards, three World Oil awards and the 2007 Offshore Technology Conference Spotlight on New Technology Award.

Dow Jones Sustainability Index – •Our overall score in the Dow Jones Sustainability Index (DJSI) improved by 25 percent over 2006. We were sector leaders in three categories: Risk and Crisis Management, Codes of Conduct/Compliance/Corruption and Bribery, and Customer Relationship Management. Halliburton scored above the sector average in 11 other categories.

Sexual orientation has been added •to those policies in our Code of


Halliburton’s vision is: To be the preferred upstream service company for the development of global oil and gas assets.

Halliburton’s 2007-2009 strategy is: To secure our leadership as a pure-play oilfield service company by leveraging our existing strengths; balancing our global platform of products, services, technology and markets; and establishing a distinctive competitive position that provides sustainable growth over time.

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Business Conduct (COBC) that relate to harassment and equal employment opportunity.

We implemented a new Joint Venture •(JV) and Non-Wholly Owned Subsidiary (NWOS) policy in February 2007. This policy establishes a process for designating which Halliburton policies and business practices a JV or a NWOS will be asked to adopt.

Meeting Continuing Challenges: It starts with vision.

No company can afford to rest on it's past successes. Long term success is based on the ability to anticipate and meet today's and tomorrow's challenges and opportunities at the global and local level. With planning, strategic thinking and anticipation, we examine every challenge through the lens of opportunity.

We continue to focus on our safety performance. In 2007, we had four employee fatalities. Nothing we do is more important than eliminating loss of life in our operations. We experienced decreases over 2006 in our Total Recordable Injury and Lost Time Injury rates. We continue to regard the safety of our employees as a core value and as the first consideration in everything we do; we will not be satisfied until we have achieved our goal of zero incidents.

Talent attraction and retention remain among our key ongoing business challenges. No business can succeed without the ability to acquire and retain an educated and motivated workforce. In 2007, we increased hiring, reduced turnover and accelerated employee training over the previous year. These challenges remain at the forefront of all of our business activities.

Expanding our technology footprint by globalizing our technology centers will put us in closer contact with our client base and allow us to take advantage of a workforce with greater diversity in talent, educational backgrounds, skill sets and solutions.

Climate change is increasingly seen as a major factor for business. Reducing carbon emissions is good business and presents new business opportunities. Finding ways to take advantage of this issue is seen as a key business opportunity.

Awards: It starts with setting the bar very, very high.

Aiming high tends to make Halliburton people high achievers. It is not surprising, then, when our company and our people win industry awards, gaining global recognition for the innovative work we do for our customers, and for the exemplary ways in which we conduct our business.

January 2007 – Halliburton won the 2007 Offshore Energy Achievement Award in Well Construction for Sperry Drilling

Services’ ReFlexRite® multilateral system. The ReFlexRite system technology is an important step toward extending the productive life of existing wells in mature fields in a cost-effective manner.

March 2007 – Halliburton was named at the 2007 Offshore Technology Conference as a recipient of the Spotlight on New Technology Award for the Honey Comb Base (HCB™) tank system for cuttings storage and discharge.

April 2007 – Halliburton won three Hart’s E&P meritorious engineering achievement awards. Halliburton’s three prize-winning technologies were: the ReFlexRite multilateral system; AssetPlanner™ software; and the SuperFill™ surge reduction system.

May 2007 – Halliburton was chosen by the Engineering, Science and Technology Council of Houston to receive an award for Excellence in Education in recognition of the Project Energy Teacher Workshop held at the Offshore Energy Center.

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June 2007 – For the second year in a row, Halliburton was selected as one of the Best Places to Work in Houston by the Houston Business Journal. In our category, companies with more than 500 employees, our ranking climbed from 12th place in 2006 to eighth on the 2007 list. Halliburton is the only energy services company to rank in this elite category.

September 2007 – In tough competition among fi ve corporate contenders, Halliburton won the Supplier Diversity Innovation Award from the Houston Minority Business Council.

October 2007 – Halliburton won three 2007 World Oil awards. Senior Technical Advisor Dr. Philip Nguyen received the 2007 Innovative Th inkers Award; Halliburton’s DepthStar® tubing-retrievable safety valve (TRSV) was named Best Completion Technology; and TOTAL Indonesie received the Health, Safety, Environment/Sustainable Development Award for a project in which it used Baroid Surface SolutionsTM

service. Additionally, two other Halliburton employees were fi nalists for the Innovative Th inkers Award, and the company was represented by fi nalists in six of the other 11 award categories.

October 2007 – Ingrid Robinson, manager of Global Supplier Diversity, was named “Best of the Decade” in Supplier Diversity by Women’s Enterprise USA magazine.

November 2007 – Th e Society of Petroleum Engineers Regional Distinguished Corporate Support Award, which recognizes “excellence in leadership and … the commitment of time, energy and professional resources” to the engineering fi eld, was presented to Halliburton for the work we do with students during National Engineering Week.

Governance: It starts with integrity.

Corporate governance is a matter of enabling the company to serve the best interests of all its stakeholders effi ciently, profi tably and, above all, honorably. Halliburton’s aff airs are governed by its board of directors, whose responsibilities include:

Evaluating the performance of the •chief executive offi cer and, with the compensation committee, setting his compensation for the next year

Reviewing succession plans and •management development programs

Reviewing and monitoring corporate •performance against long-term strategic and business plans

Adopting policies of corporate conduct•

Evaluating annually the overall •eff ectiveness of the board

Reviewing matters of •corporate governance.

Number and Types of Committees

A substantial portion of the analysis and work of the board is done by the following four standing board committees: Audit; Compensation; Health, Safety and Environment; and Nominating and Corporate Governance. Each committee’s charter is reviewed periodically by the committee and the board. Reports on each committee meeting, along with copies of the minutes, are presented to the full board. Any director appointed to a committee is expected to participate actively and fully in meetings.

Chairman of the Board and Chief Executive Offi cer

Th e chief executive offi cer of Halliburton also serves as the chairman of the board, and is responsible to the board for the overall management and functioning of Halliburton. Th e board comprises 12 directors, 11 of whom are independent. In 2007, a second woman was added to the board, which now has two women and one minority member.

Two-thirds of the board members must be independent directors. Halliburton meets the minimum requirements for director independence as established by the U.S. Securities and Exchange Commission.

Th e defi nition of “independence” is reviewed periodically by the nominating and corporate governance committee. All directors complete independence questionnaires at least annually, and the board makes determinations of the independence of its members.

Shareholder and Employee Communication with the Board

Halliburton has a process designed to help Halliburton’s shareholders communicate easily and eff ectively with the board of directors. Th e process was approved by the board and meets the requirements of the New York Stock Exchange and the Securities and Exchange Commission. Methods of communication with the board include mail (Board of Directors, c/o Director of Business Conduct, Halliburton, 1401 McKinney St., Suite 2400, Houston, Texas 77010, U.S.); telephone (888-312-2692, toll-free; or 770-613-6348); and e-mail ([email protected]). Information regarding these methods of communication is also on Halliburton’s Web site, www.halliburton.com, under “Corporate Governance.”


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Halliburton’s director of business conduct, a company employee, reviews all shareholder communications directed to the board of directors through these methods. Any signifi cant communication involving accounting, internal accounting controls or auditing matters is referred to the chairman of the audit committee; the lead director is promptly notifi ed of any other signifi cant shareholder communications. A report summarizing communications is sent to each director at least quarterly, and copies of communications are available for review by any director.

Confl icts of Interest

If an actual or potential confl ict of interest develops because of signifi cant dealings or competition between Halliburton and a business with which a director is affi liated, the director must report the matter immediately to the chairman of the board for evaluation by the board. Such a confl ict must be resolved, or the director should resign.

If a director has a personal interest in a matter before the board, the director must disclose the interest to the full board, excuse himself from participation in the discussion and abstain from voting on the matter.

Code of Business Conduct

Halliburton takes seriously its responsibility to make sure every employee is aware of, and committed to upholding, the company’s COBC policies. As the company Web site states, “Th e Halliburton company Code of Business Conduct is a guide for every company director, offi cer, employee and agent in applying legal and ethical practices to their everyday work.” It may be reviewed at the Web site: http://www.halliburton.com.


Industry Sector Average Score

Halliburton Score

Dow Jones Sustainability IndexHalliburton compared to overall industry sectorMaximum possible score = 100

3641 43

39

56

46

6366 68

34

5865

Overall Sector Leader

2007200620052004

7

2

0 0

5

0 0

4

Fatalities

Contractors

Halliburton Employees

2007200620052004

Operating Incomein millions of U.S. dollars

$1,179

$2,164

$3,245$3,498

2007200620052004

Signifi cant Performance Indicators

92.3%91.4%92.9%

96.2%

Done Right® Services Index*

* See discussion on page 27.

2007200620052004

90016halD1R1.indd 9 4/23/08 1:42:59 PM


Worldwide activity increased in 2007, particularly in the Eastern Hemisphere, boosting Halliburton's oilfi eld services revenue to an all-time high of $15.3 billion for the year. Th is was an 18 percent increase over revenue posted in 2006. Operating income for 2007 was $3.5 billion, an increase of 8 percent over operating income in 2006.

Beginning in the third quarter of 2007, fi nancial results were reported according to Halliburton’s new two-operating-segments structure – the Completion and Production Division, and the Drilling and Evaluation Division.

In 2007, our Completion and Production Division, which includes the Cementing, Completion Tools and Production

Enhancement product service lines, recorded revenue of $8.4 billion and operating income of $2.2 billion. Our Drilling and Evaluation Division, comprised of Baroid Fluid Services, Landmark, Security DBS Drill Bits, Sperry Drilling Services, and Wireline and Perforating Services, posted $6.9 billion in revenues and $1.5 billion in operating income in 2007.

Eastern Hemisphere revenue increased 27 percent year-over-year and operating income increased 26 percent year-over-year. Th is continued growth in the Eastern Hemisphere, coupled with emerging opportunities in Latin America, is expected to provide the strength to off set the challenges facing the North American market.

Geophysics and Geology Applications, Support Analyst in Luanda

Many employees in angola who have benefi ted from Halliburton’s world-class training and development

programs are eager to pass along their knowledge to young angolans who will one day be providing for their

own families and contributing to the success of companies like ours. i’m one of those employees.

every Monday, i go to the agostinho neto university in luanda, where i once studied, to mentor two students in the Department

of Geophysics. While i was at the university, i became familiar with GeoGraphix®, an industry leading Windows®-based exploration-

to-production software solution. that experience added to the knowledge i’ve gained in my job over the past year as a support

analyst for landmark. i now share my knowledge with these students and help them use GeoGraphix software or applications.

i teach them the functionalities of the software and how they can maximize and take advantage of this tool while developing

their thesis. in 2006, Halliburton made the fi rst of several software donations worth $269,500 to the university.

i know that my involvement with these young angolan students will some day pay off . and, whether or not they eventually

go to work at Halliburton, their technical training will be used in our industry and, hopefully, in their native country to bolster

the economy and to strengthen their own standard of living. So, it is a pleasure for me to mentor these students.

Economic Profi le

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Market Presence: It starts with forward thinking.

Technology

Halliburton is moving forward with a singular focus on upstream development, and the company’s Technology group has set forth a mission aligned with that focus. The group is developing initiatives that will enable Technology to balance its customer mix and geographic strength while expanding and diversifying its workforce.

One such initiative is the launch of two global Research and Development (R&D) centers that will operate collaboratively with existing Technology Centers in Duncan, Oklahoma, and in Houston and Carrollton, Texas. In recent years, more than 90 percent of our R&D spend has been in North America. Now, as our customers’ operating bases are increasingly shifting to the Eastern Hemisphere, we are shifting the distribution of our R&D spending. The first of two new global technology centers opened in Pune, India, in November 2007. The 60,000-square-foot facility will focus initially on the areas of production enhancement, completion tools, drilling fluids and cementing. A second technology center will open in Singapore in 2008.

The globalization of our technology centers will serve the critical purpose of putting our technologies in closer communication with our client base. But, perhaps just as importantly, it will provide us with the benefit of a workforce with greater depth and diversity in talent, educational backgrounds, skill sets and solutions.

Real-time technology will also play a significant role in shaping and diversifying this new, upstream-focused Halliburton. Already a leader in real-time operations, Halliburton is working to create additional opportunities for our

customers to employ this technology to improve the speed and quality of their decisions. We expect the percentage of real-time jobs that Halliburton performs annually to double, increasing from approximately 5 percent to more than 10 percent. Real-time technology holds an additional benefit: It enables us to use fewer engineers and for these engineers to spend less time in the field, reducing safety risks and mitigating the environmental footprint of field operations.

Real-time operations and a growing network of technology centers and people are just two examples of how Halliburton’s Technology group will help the company in executing its strategy. The technology road map that we have developed will help lead the organization to new and different opportunities, to a diverse array of talent and, ultimately, to its goal of becoming the preferred upstream service company for the development of oil and gas assets.

Patents

Halliburton currently holds approximately 13,000 U.S.-registered patents, 4,647 of which are active, and 296 of which were added to our portfolio in 2007. About 51 percent of our active patents are held in the U.S., with the remaining 49 percent registered in other countries. Our 2007 total technology spending was $334 million. The Patent Board™ ranked Halliburton No. 1 in its Energy and Environmental sector in November 2007.

Mergers and Acquisitions

Two of Halliburton’s strategic imperatives – to rebalance the business portfolio and to increase revenue over the next three years – help set the agenda for Halliburton’s Mergers and Acquisitions (M&A) group. Halliburton is intent on growing revenue and expanding its regional emphasis in the

$7,998

$10,100

$12,955

$15,264

Revenuein millions of U.S. dollars

2007200620052004

Operating Incomein millions of U.S. dollars

$1,179

$2,164

$3,245$3,498

2007200620052004

North America

Latin America

Europe/Africa/CIS

Middle East/Asia

$7,133

$1,798

$3,700

$2,633

2007 Revenues by Regionin millions of U.S. dollars

2007 Operating Income by Regionin millions of U.S. dollars

North America

Latin America

Europe/Africa/CIS

Middle East/Asia

$1,956

$ 349

$ 744

$ 635

* Excluding corporate and other

90016halD1R1.indd 12 4/23/08 1:43:05 PM

Eastern Hemisphere. The company’s organic growth will be supplemented by an effective M&A strategy.

Because it is a matter of strategy and not just opportunism, the acquisition process is largely driven by operations. Product service lines have the primary responsibility for finding acquisition candidates, and each division has an executive in charge of identifying merger prospects. This approach has been successful: More than 100 prospects were suggested in 2007.

Execution and integration are key elements in the successful implementation of the M&A strategy. Scaling up the acquisitions program requires a systematic, reliable process for transacting deals efficiently and for integrating the target successfully.

The “integration playbook,” a compilation of the activities required to enable a new business to function within the Halliburton framework, covers the operational aspects and support functions. It sets out the desired end state for each function and provides a road map, a task list and a timeline to guide managers through the process. The playbook is a knowledge-management tool that will continue to be expanded and refined.

While most of the new-business integration takes place within the first six months, the success of an acquisition is measured and presented to the board after a year, and again after two years. The primary focus is on financial performance, but factors like employee retention and customer relationships are also indicators of success.

The M&A group is working hard to establish a change in mindset – to infuse the company with an M&A culture. This means that people understand what is required to identify targets, execute deals efficiently and integrate acquisitions

successfully. In sum, the aim is to establish a world-class M&A program.

A summary of 2007 acquisitions includes:

January 2007 – Halliburton’s Drilling and Evaluation Division acquired all intellectual property, current assets and existing business associated with Calgary, Canada-based Ultraline Services Corporation, a division of Savanna Energy Services Corp. Ultraline is a significant provider of wireline services in Canada and is known for its expertise in cased-hole wireline and perforating services.

July 2007 – Halliburton’s Completion and Production Division acquired the entire share capital of PSL Energy Services Limited (PSLES). This acquisition supplements our existing product offerings throughout the Eastern Hemisphere. The recognized capabilities of PSLES in well-intervention services and pipeline and process services are an excellent complement to Halliburton’s production enhancement capabilities and continued global growth. Its operational bases are located in Algeria, Azerbaijan, the Asia-Pacific region, the Middle East, Norway and the U.K.


Total U.S. Patents Issuedand rank among all U.S. companies

Halliburton Rank Among U.S. Companies

* Not available at press time

Total Patents

209

88

193

285

8774

296

NA*

2007200620052004

$229 $218$254

$301

Research and Development Spendingin millions of U.S. dollars

2007200620052004

90016halD1R1.indd 13 4/23/08 1:43:07 PM


90016halD1R1.indd 14 4/23/08 1:43:10 PM

November 2007 – Halliburton’s Drilling and Evaluation Division acquired the entire share capital of OOO Burservice. Burservice is a leading provider of directional drilling services in Russia.

Manufacturing

Four new manufacturing facilities were added in 2007 to support the locations where our business is conducted. Th ese new locations will support our eff orts to deliver greater speed to market by reducing the need to transport materials over long distances. Additionally, the company will be able to meet requirements for localized sourcing by hiring employees from local communities.

Monterrey, Mexico – Th is 100,000-square-foot facility will support our Completion Tools and Cementing product service lines.

Sao Jose dos Campos, Brazil – Th e facility will be focused primarily on Completion Tools. It will fi nalize packers, retrievable tools and subsurface fl ow-control tools.

Johor, Malaysia – Th is 200,000-square-foot facility supports the Completion Tools and Cementing product service lines. Th e facility manufactures fl oat equipment, sliding side doors and permanent and retrievable packers.

Singapore – Th is 200,000-square-foot operation will support the Sperry Drilling Services, Wireline and Perforating Services, and Security DBS Drill Bits product service lines.

With these four new facilities, Halliburton has a total of 17 manufacturing facilities globally. Initially, they will ship from $2.5 billion to $3 billion worth of products each year, while projecting 15 percent year-over-year manufacturing growth. It is estimated that these four new facilities will represent 25 percent of global output by 2012. In addition, much of our future manufacturing capacity growth will occur at these new facilities, which together currently employ approximately 300 employees.

Sustainable Sourcing: It starts with Supplier Diversity.

A successful supplier diversity program requires creativity and commitment to ensure an inclusive business environment. Just as a diversity of employees enhances the company’s business culture, supplier diversity improves the supply chain, allows more eff ective management of the company’s business and expands the company’s contribution to communities. Our vision is to become the global leader in supplier diversity and in national supply development in countries with open markets around the world.

Halliburton is committed to:

Maximizing opportunities •for diverse businesses

Fostering a culture that promotes •the economic and sustainable development of diverse business enterprises and the global communities in which we operate


90016halD1R1.indd 15 4/23/08 1:43:11 PM

Providing mentoring for growing •suppliers and sharing with them insights about the business

Building partnerships with suppliers •to deliver added value and exceptional service to our customers, as well as to improve our business performance and that of our suppliers.

Supplier diversity, with its ability to provide a competitive advantage in the marketplace, is an integral part of Halliburton’s long-term business strategy and key to our sustainable sourcing focus. As we continue to work on developing a world-class model, we are changing our company’s culture. We’re involving more company leaders. We’re incorporating supplier diversity into business units, support functions and global markets. We are building successful business relationships in which we are able to partner with our customers to develop diverse suppliers.

We believe that there is a strong business case for supplier diversity. For example, several of our strategic customers make supplier diversity a contractual requirement. By making it a consistent priority on every Halliburton project, we partner with our customers to meet their goals and our own. Meeting or exceeding our customers’ expectations ultimately

makes our company more competitive and strengthens our relationships with customers, as well as with suppliers.

In 2007, the successful adoption of our strategy to build the capacity of our diverse suppliers resulted in increased expenditures with minority, women, small and national/local content suppliers to over $1.2 billion, which represents a 10 percent increase over 2006. However, as an outcome of strategic sourcing eff orts to reduce our overall supply base, the total number of diverse suppliers slightly decreased from 16.5 percent to 16 percent of our total supply chain. In 2008, our key metrics for this program will include:

Percent of annual increase in •diverse supplier spend

Number and percent increase •of fi rst-tier suppliers reporting second-tier spend

Number and percent increase of •new and existing diverse suppliers

Quarterly business reviews by supplier-•diversity support organizations

Metric inclusion in supplier •scorecards, bid evaluations and employee People, Performance, Results (PPR) evaluations.


Minority, Women and Small-Business (MW/SB)Expenditures

MW/SB percentage of total global spend

MW/SB spend in millions of U.S. dollars

$631

15.7%

$793

16.3%

$1,11417.3%

$1,221

15.2%

2007200620052004

Suppliers

Percentage of total suppliers

Total number of MW/SB suppliers

8645

15.7%

7426

16.3%

7364

16.5%

6965

16.0%

2007200620052004


Halliburton Score

Dow Jones Sustainability IndexOverall Score Economic DimensionMaximum possible score = 100

4452

64

55

75

53

68

86

65

56

75 76


2007200620052004

90016halD1R1.indd 16 4/23/08 1:43:14 PM

Now in its fifth decade, Halliburton’s relationship with Angola continues to grow. The area’s promise is increasingly apparent, and our presence there benefits our company as well as Angola’s people and economy.

One reason why the relationship has mutually flourished is because Halliburton is a well-organized, transparent and profitable business that is passing along know-how to our skilled and valued Angolan employees. Our greatest contributions to Angola’s well-being, however, take place through our insistent efforts to utilize and develop local talent.

Local Hiring

Of Halliburton Angola’s approximately 1,300 in-country employees, 890 – or 67 percent – are Angolan nationals. Those figures constitute a 21 percent increase over 738 in 2006, and, compared to other organizations active in Angola, give Halliburton a ranking in the upper quartile.

Our Angolan employees occupy positions at all levels of the Angolan organization, including 111 that are professional staff, supervisors and coordinators; product line managers; departmental managers; country product service line managers; and operations managers. We consider this to be one of the company’s major achievements in Angola, and it is a reflection of the company’s focused effort throughout 2007 to expand our localization there.

Local Talent Development

All Angolan engineers, technicians and administrators receive world-class training that conforms to international standards. Halliburton Angola spends an estimated $1 million annually training Angolan employees, both in Angola and abroad. In 2007, the company sent 75 employees outside Angola for training at all levels.

The long-term impact of providing world-class technical and business training to local employees should

not be underestimated. Some of these employees will leave Halliburton to start their own businesses. Most will likely invest in property and other commercial interests in Angola. The benefits to Angola are clear, and the benefit to Halliburton is seen in deepened and fortified relationships with Angola, its communities, its institutions and its government.

All Halliburton employees also receive high-quality training, appropriate to their roles, in health, safety, environment and service quality. The company and its employees are the most direct beneficiaries of this training, but its benefits undoubtedly extend to the communities in which our employees live, potentially affecting thousands of people throughout the country.

Angola: Country Profile

90016halD1R1.indd 17 4/23/08 1:43:17 PM

90016halD1R1.indd 18 4/23/08 1:43:20 PM

Let Halliburton’s sustainability Web page tell the story (www.halliburton.com/sustainability).

Halliburton will be viewed as a good corporation and respected member of every community where we operate. We will preserve the environment and demonstrate that our presence provides sustainable social and economic benefi ts.

We will facilitate and enable the integration of sustainability thinking into all business activities and the continuous improvement of stakeholder relationships, employees, governments, partners, suppliers, nongovernmental organizations and communities.

Halliburton’s Sustainable Future: We will implement our sustainability strategy using these three key elements –

sustainable technologies, sustainable relationships and sustainable sourcing.

Th e company’s environmental policy is to prevent environmental pollution in all of its business activities and operations. Th e management of the company is responsible for diligently carrying out this policy and for ensuring compliance with all applicable laws and industry standards.

Our environmental policy is dynamic and responsive to emerging issues and concerns. We continuously evaluate the environmental aspects of our products and services to ensure that they have the least environmental impact; are safe in their intended use; consume energy and natural resources effi ciently; and can be recycled, reused or disposed of safely.

Th e company communicates this policy to employees, clients, contractors, suppliers, partners and customers, and works with the communities in which it operates to achieve the highest environmental goals to the benefi t of both our neighbors and our company.

Th e policy is implemented by the company under the oversight of the board of directors’ Health, Safety and Environment (HSE) committee and of the chief HSE offi cer, who is designated by the CEO. Th e chief HSE offi cer makes recommendations to the board’s HSE committee and reports to the board’s HSE committee twice per year to review the company’s compliance with policies and procedures, HSE performance and HSE audit program activities.

Analyst, Global Operations Accounting in Houston

it started with a contest at work and ended with one person saving 11,000 gallons of water a month and almost $1,000 per year.

that’s a lot of money and a lot of water.

last year, the Houston-area performance improvement initiative (pii) environmental team sponsored a water conservation competition during

the city’s hottest months (May through august) to encourage employees to think about ways to save on water usage.

in the 2007 pii White paper, water conservation was noted as a core component of environmental stewardship in the oil and gas industry.

to address this, pii is focusing on lowering resource consumption, and the water conservation contest was an eff ort to help push this initiative

in the Company's Houston facilities.

“Since Halliburton encourages us to conserve water at work, i fi gured i could bring conservation home. i discovered that a few little changes could

make a huge diff erence. i live in an older house, and the fi xtures were older, too. i repaired the leaky, running toilets, replaced the shower heads

with low-fl ow models, installed a more effi cient pump in my swimming pool, ran full loads of laundry and began hand-washing my dishes.”

these simple changes are saving this employee money on her monthly utility bills, and they’re helping her conserve 11,000 gallons of water a

year! that’s enough water to provide one person with a shower a day for more than 2.5 years. and, it’s enough to fi ll 176,000 drinking glasses.

“you can conserve water if you’re conscious of it. it doesn’t cost much (or anything) to change, and one little change can make a huge diff erence!”

Environment Profi le


90016halD1R1.indd 19 4/23/08 1:43:23 PM

Board Health, Safety and Environment Committee

Purpose

The purpose of the Halliburton board’s HSE committee is to assist the board in fulfilling its responsibility to provide global oversight and support of the company’s health, safety and environmental policies, programs and initiatives.

Responsibilities

Reviewing the status of the company’s •HSE performance, including processes to ensure compliance with internal policies and goals and applicable external laws and regulations

Reviewing and providing input to •the company on the management of current and emerging HSE issues

Reviewing semi-annual presentations •from, and providing oversight to, the company’s Sustainable Development (SD) and HSE executive committee

Reporting periodically to the •board of directors on HSE matters affecting the company

Approving the annual Halliburton •“Corporate Sustainability Report”

Organizational Responsibility

The most senior position with operational responsibility for environmental performance is the Chief HSE Officer, who works closely with the board’s HSE committee to review and update the company’s policies, as well as to monitor company-wide compliance.

However, the responsibility for environmental performance is shared by every Halliburton employee, and that responsibility is made clear at the time of hire and reinforced throughout their careers. Each employee signs an agreement to uphold the company’s Code of Business Conduct (COBC), which includes a section specific to HSE. Required training is provided in the company’s I Learn curriculum (the online training resource accessible to all employees). Along with instructor-led training, approximately 50 I Learn courses are offered under the general heading of HSE, and dozens of additional, more specialized classes and learning modules are also available.

SD and HSE Executive Committee

The responsibility for promoting Sustainable Development and HSE as core company values, and for fostering a culture that embraces them, rests with the SD and HSE executive committee. The committee takes the lead in developing, approving and implementing company policies and standards as they relate to SD/HSE issues, with attention to the global adoption of appropriate practices.

To accomplish its chartered objectives, the committee:

Meets at least once per quarter•

Promotes commitment to •SD and HSE excellence at all levels of the organization

Establishes company SD and •HSE policies and practices, approves their execution and monitors their implementation

Serves as liaison to the board’s HSE •committee, providing pertinent information and developing specific plans to follow up on advice from the board committee


Commitment to Sustainability

Sustainable Sourcing

Our commitment to being part of the solution to global resource challenges through technology development

Engagement with those groupswho can influence our

long-term success

Building a global workforceand maximizing local spend

Sustainable Technologies

ENV

IRO

NM

ENTA

L

SOCIA

L

ECONOMIC

Sustainable Relationships

PROFIT

CULT

URE

PEOPLE

90016halD1R1.indd 20 4/23/08 1:43:23 PM

Oversees participation of executive •management in the investigation and review of serious HSE incidents

Reviews incidents with legal counsel, •seeks guidance on legal exposures and ramifications and the best ways to handle them and prepares for litigation

Reviews corrective/preventive •measures recommended by operations; and plans follow-up to ensure implementation of such measures.

The committee comprises the CEO (who serves as chairman of the committee) the executive vice president of Strategy and Corporate Development, who also serves as the Chief HSE Officer; the executive vice president of Administration and chief Human Resources officer; the presidents of the Eastern and Western hemispheres; the senior vice president of the Law Department; and the director of HSE and Operational Excellence. Any combination of five of the members listed above constitutes a quorum able to discharge the responsibilities of the committee. Permanent invitees include the global environmental manager, who coordinates the activities of the committee, and the head of the environmental legal practice group, who serves as legal counsel to the committee.

Performance Improvement Initiative

A decade ago, Halliburton launched a program called the Performance Improvement Initiative (PII). PII focuses on three areas that are critical to the company’s success and sustainability: Health and Safety, Service Quality and Environment.

At the beginning of each year, executive teams representing these three areas set objectives and formulate strategies. Mirror teams at the regional and

local levels determine action plans, responsibilities, milestones and timelines to achieve these goals. Every month, meetings are held locally to discuss progress, and the executive teams meet quarterly with countries/regions to review progress. At the end of the year, the executive teams select the countries/regions that have shown superior commitment to all three areas of PII and honor them with the Chief Executive Officer’s Award.

“One Is Too Many” Campaign

In 2007, Halliburton created a campaign to support a focused effort on achieving a zero rate for HSE incidents – zero fatalities, zero injuries, zero environmental incidents, zero health hazards, zero regulatory citations.

The campaign designed to communicate this stringent standard is titled, “One is too many,” and it features posters and other materials that list examples of the “one” that will not be tolerated: one unbuckled seat belt, one flicked cigarette, one frayed cable, one material spill, one outdated fire extinguisher, one speeding incident. The campaign has been rolled out to facilities and is expected to be fully deployed in 2008.

Improved Reporting on Environmental Metrics

Every year, Halliburton works to make improvements in tracking and reporting our environmental data. In 2007, the Environmental PII team provided the framework for progress and served as a major driver behind improvements in gathering data. The plan required new efforts to capture information about fuels, water usage and waste, and sustained efforts on recording utility usage for our facilities. In this year’s report, for the first time, we are providing new metrics on utility usage data. This data represents information on 100 percent of our U.S. and Canada facilities and about 50 percent of our other non-U.S. facilities. We are continuing to focus on our data capture for international locations and are committed to improving the percentage reporting to all of our facilities worldwide.

As a result of this stronger focus, new programs and better reporting on environmental issues, our score in the Environment category of the Dow Jones Sustainability Index (DJSI) for 2007 increased to 57, 19 points higher than our 2006 score. (The industry sector average was 29 and the sector



Halliburton Score

Dow Jones Sustainability IndexOverall Score Environmental DimensionMaximum possible score = 100

31 3339 37

52

38

66 66 68

29

57

70


2007200620052004

90016halD1R1.indd 21 4/23/08 1:43:23 PM

In a company where environmental awareness is so thoroughly integrated into the culture – and Halliburton is such a company – it is difficult to spotlight any one country as an exemplar. This disclaimer notwithstanding, the U.K. stands out as an exceptionally passionate proponent and practitioner of concern and action for the environment.

Halliburton’s U.K. team, working through a dynamic Performance Improvement Initiative (PII) Environment group, has continued its long-established trend in reducing the company’s “footprint” in a wide range of categories.

For the fourth successive year, the quantity of waste sent to landfill has been reduced, and general waste recycling improved over 2006.

The team’s 2006 goal of rolling out centralized waste stations at all facilities has been accomplished. The U.K. management team has demonstrated its commitment to the environmental PII group by fully supporting this project and helping the PII team overcome challenges.

Recycling has been expanded to include plastic drink bottles, and now under study is the use of a machine to modify cardboard boxes for reuse as packing material.

A clear indication of the U.K. team’s commitment is the feedback received after an external assessment was performed in January 2008. The audit

produced uniformly positive feedback for the commitment of the PII team, support from all employees, and praise for the range and quality of the team’s environmental initiatives.

One initiative in particular serves to illustrate the passion with which the Halliburton U.K. employees approach environmental efforts:

At the end of July 2007, all Halliburton U.K. employees were invited to submit suggestions that could have a positive environmental impact. More than 80 entries were received from throughout Halliburton U.K. (and even a few from European colleagues).

The large number and wide variety of the entries received made the judges’ job very difficult. The judging criteria were:

Environmental impact•

Benefit to Halliburton•

Cost benefit•

Creativity and innovation•

Ease of implementation.•

The judges especially focused on ideas that involved day-to-day behaviors, such as using ceramic mugs for drinks rather than plastic disposable cups or including a standard notation in e-mail messages requesting recipients not to print out electronic messages.

The two winners were chosen for the uniqueness of their ideas, which were markedly different from each other but both very sound contributions.

One suggestion was to assess air miles traveled by each individual and the consequent contribution to carbon footprint. Each product service line (PSL) would then be challenged to reduce air travel, while the management team would promote alternatives such as videoconferencing. If a group did not meet its travel-reduction target, it could offset its footprint by planting trees or implementing other environmentally friendly practices.

The other idea that captured the judges’ imagination was to make all post-well reports electronic. Calculations suggested that the cost of each printed post-well report was about 30 pounds (about US$59). If this could be converted to a paperless exercise, the savings to Halliburton could be as much as 3,600 pounds (about US$7,072) per PSL per year, with the environmental bonus of not using paper for printing, photocopying or binding.

The judges were very impressed with both winning entries and nominated an additional 10 suggestions as runners-up.

This kind of enthusiastic and inventive effort does not happen by accident. Halliburton is proud of its U.K. employees and looks forward to all that they will accomplish on behalf of the environment in 2008.


United Kingdom: Country Profile

90016halD1R1.indd 22 4/23/08 1:43:23 PM

best score was 70.) We scored above the average for the oilfi eld services sector in three of the four environmental categories – Environmental Reporting, Environmental Policy/Management Systems and Releases to the Environment – and below the sector average in the Environmental Performance category.

Emissions, Effl uents and Waste

For the fi rst time, all facilities have been asked to track and measure hazardous and nonhazardous wastes, potable and nonpotable water usage, and vehicle fuel usage. Creating and implementing processes for capturing this information at hundreds of facilities across the globe have been challenging. While we have made good progress, we are not in a position to make a full report for 2007. We estimate that 50 percent of our facilities have captured this information. We will continue to pursue the full capture of these data, and we anticipate being able to include complete and specifi c numbers in our 2008 report.

Climate Change

Our carbon dioxide (CO2) equivalent emissions [including methane but excluding nitrogen oxides (NOx)] are associated with our facilities, on-road vehicles and off -road service equipment. In 2007, that total came to 3.27 million metric tons, a 4 percent increase from 2006. Of that total, approximately 70 percent was generated by our core pumping services in our Completion and Production Division. Th e company’s biggest emitter of nitrogen oxides is our “mobile” fi eld equipment, both on-road and off -road engines.

In last year’s report, we expected to have a public position on climate change in 2007. Th is did not take place, and we have not formally adopted a public position on this issue. However, we are

making progress internally in several areas. We are continuing to collect data on greenhouse gas emissions from all locations; we are evaluating our products and services related to carbon capture and sequestration; and we are participating as a founding member of the North American Carbon Capture and Storage Association.

Currently in progress are Research and Development projects concerning:

A frac factory that is more fuel-effi cient •on location and uses alternative fuels

Low-horsepower hydraulic fracturing•

Advanced power systems•

Laser technology for cutting •both rock and metal.

Th e eff ective capture and storage of CO2

involves many of Halliburton’s core competencies: subsurface assessment, drilling, completion, stimulation, monitoring and remediation. We bring these technologies and 30 years of experience to the work we are doing with our customers in using CO2 for enhanced oil recovery and on carbon sequestration projects.

Sustainable Technology: It starts with diligence.

Sustainable production and environmental stewardship are key considerations in every Halliburton undertaking. We continuously seek to prevent or mitigate the environmental impacts of our industry and our own work primarily by continuing to develop industry-leading technologies that both refl ect and advance our standard of sustainability.

Halliburton’s goal is to provide products and services that have the smallest environmental impact, are safe in


Greenhouse Gases million metric tonnes of CO2 equivalent

2.642.90

3.15 3.27

2007200620052004

Greenhouse Gases Normalizedmillion metric tonnes of CO2 equivalent/hours worked

.0246 .0248 .0244.0224

2007200620052004

Industrial Waste (Globally)total U.S. tons

Hazardous Non-Hazardous

547.1

1,284.3

Water Usage (U.S. Only)total gallons in millions

Facility Wellsite

305.3 322.5

Environmental Reservesin millions of U.S. dollars

$28$35

$39

$72

2007200620052004

90016halD1R1.indd 23 4/23/08 1:43:28 PM


their intended use, consume energy and natural resources effi ciently and can be recycled, reused or disposed of safely. We seek to develop services and technologies for maximizing the recovery of oil and gas in existing reservoirs, and for pursuing clean and renewable energy sources for the future. In 2007, Halliburton spent approximately $350 million on technology R&D.

“Green” Chemicals

Halliburton’s Environmental Technical Excellence team, established in 1997, continues to develop new chemicals,

chemical blends and other products that meet specifi c government regulations, and to acquire the capabilities necessary to perform all required testing and evaluation procedures in countries where we do business. Halliburton has the capability to perform in-house environmental testing for biodegradation, bioaccumulation and aquatic toxicity at our Houston R&D center, which is certifi ed to ISO 9001:2000 and current National Environmental Laboratory Accreditation Conference (NELAC) standards, and is in compliance with the principles of Good Laboratory Practice (GLP).

We have developed approximately 70 chemicals that meet stringent Norwegian requirements for toxicity, biodegradability and bioaccumulation. Th ese products are approved for use in the environmentally sensitive and highly regulated North Sea and they can be used in other parts of the world.

Th e following are technology highlights for 2007:

New Surfactants Testing Procedure

In 2006, the Centre for Environment, Fisheries and Aquaculture Science (CEFAS), a North Sea regulatory body, imposed restrictions on all surfactants used in the U.K. sector of the North Sea and required the substitution of all surfactants within three years. Because surfactants are used in hydraulic fracturing and cementing, these restrictions severely hampered the ability of service companies to treat wells using these products.

CEFAS imposed restrictions primarily due to the lack of procedures for assessing the potential bioaccumulation (PBA) of the surfactants. Th e only recognized method for measuring the PBA was to conduct actual

bioconcentration-factor (BCF) tests that were both expensive and diffi cult, and required that animals be killed for testing.

In response, Halliburton developed an innovative and economical procedure for estimating a surfactant’s PBA; this procedure was approved by CEFAS in 2007. Th e procedure measures PBA directly and does not require the killing of animals. Th e procedure is expected to reduce human safety risk, help promote the sustainability of the fi shing and energy industries and reduce test-cycle time.

In order to make the testing procedure widely available so that the entire well-servicing industry may continue operating in the strictly regulated North Sea, Halliburton withdrew its patent application. Since the inception and approval of the testing procedure, Halliburton has introduced more than 25 new chemistries specifi cally designed to meet or exceed North Sea environmental regulatory requirements.

Th e EZ-FLOTM process

Th e EZ-FLOTM cement process, developed by Halliburton, makes it easier to transport and refl uidize bulk cement and other powders. In a study of cement use for a deepwater well in the Gulf of Mexico, using the EZ-FLO cement process required one less boat run per cement job and reduced waste cement by more than 6 percent. Since its commercial introduction in 1998, the use of the EZ-FLO cement process has reduced cement waste by an estimated 42,000 tons (38,102 metric tons). In addition, eliminating boat runs contributes to lower greenhouse gas emissions.

Utility Usage Globally

U.S. Non-U.S.

Electricitytotal kilowatt hours in millions

Facility Watertotal gallons in millions

Gascubic feet in millions

240.4

63.6

U.S. Non-U.S.

305.3

582.0

U.S. Non-U.S.

1,081

314

90016halD1R1.indd 24 4/23/08 1:43:31 PM

New Defoamer for Norway Applications

Norway requires all chemicals in the Barents Sea to meet its highest classifi cation of regulation, "Poses Little or No Risk" (PLONOR). Halliburton developed a PLONOR defoamer for cementing operations, deemed best on the market by Norway operators. Halliburton commercialized the defoamer in summer 2007 and secured the U.S. patent.

Cement Retarders Approved for North Sea Use

Halliburton developed new cement retarders that meet the environmental requirements for use in the North Sea while lowering costs and improving performance. Following commercialization at the end of 2006, more than 300 jobs were performed in 2007 using these retarders.

“Green” Cementing Products

Th e Cementing product service line set a goal to generate a large portion of revenue from new products. For Cementing, “green” products account for 60 percent of new-product revenue. (Cementing defi nes “green” as “meeting or exceeding the stringent regulations of CEFAS.”) Top green revenue products in Cementing include Halad®-300, Halad®-400, CFR-8TM, Halad®-766, MIRCOMAXTM FF and ZoneSeal® 4000 applications.

Service Delivery Optimization in Production Enhancement

Service delivery optimization is an integrated, system view of the entire service and product-delivery process. Th e goals are to reduce footprint, cost and speed of delivery and to increase effi ciencies by optimizing logistics, mobilization, usage and post-job impact.

Service delivery optimization requires a close partnership with customers, who must agree to drill wells and develop fi elds to accommodate this practice. On many projects, early in the fi eld-development planning process, we work with customers to construct plans that are consistent with effi cient, economic and low-impact eff orts that will occur later in the life of the fi eld. FracFactory® service concepts are being considered in this way. We can plan for and effi ciently manage logistics such as water supply and production, handling and metering of bulk materials, hydraulic horsepower (HHP) optimization and continuous pumping operations, all tailored to meeting our customers’ needs responsibly and economically.

Service delivery optimization can involve performing most operations from a central location instead of moving from well to well. Th is makes it possible to reduce truck trips up to 30 percent, thereby reducing fuel and water consumption, surface damage and equipment needs. Additionally, operations can be coordinated to avoid disrupting the movements of migrating wildlife, a signifi cant advantage in wilderness locations.

Digital AssetTM and DecisionSpace®

Halliburton’s Digital AssetTM real-time, collaborative environment is used to model, measure and optimize the asset. It is the game-changing innovation that is critical to maximizing the use of resources to meet business objectives. Th e Digital Asset environment provides virtually unlimited access to any data, from any application, to any asset, from anywhere, at any time.

Landmark’s DecisionSpace® environment provides multidisciplinary integration, optimization and

visualization – a benefi t that customers will fi nd only with Halliburton.

Th e Digital Asset and DecisionSpace applications help operators meet the challenges associated with developing dwindling resources, such as drilling complex deepwater wells safely and cost-eff ectively, placing wells precisely to minimize their footprint, fi nding and producing unconventional hydrocarbons to meet worldwide demand and drilling in remote and environmentally sensitive locations.

Completion Tools, Long-Term Product Development Project

Halliburton is working with several major operators in Prudhoe Bay, Alaska, U.S., to develop a subsurface processing and reinjection compressor (SPARC). Th is downhole, self-powered device allows operators to re-inject one-third to one-half of the gas an individual well produces. SPARC minimizes surface processing needs and the surface footprint required for processing equipment. Environmental benefi ts include total elimination of the air emissions (nitrogen oxides, carbon monoxide, CO2 and sulfur dioxide) as a result of the reduction in surface processing. Th is is a long-term development project that is not yet commercial.

Clean Coal

Coalbed methane (CBM) is methane contained in coal seams. Coal mine methane (CMM) is extracted via hydraulic fracturing allowing the gas to be in advance of coal-mining operations, captured and used as a resource rather than being emitted into the atmosphere as a waste product.

Halliburton technologies and products are helping to enhance and enable


90016halD1R1.indd 25 4/23/08 1:43:34 PM


development of CBM and CMM, while eliminating emissions such as sulfur oxides, nitrogen oxides, mercury, and other air and water pollutants.

In 2007, Halliburton introduced a line of hydraulic fracturing fluids especially for CBM and CMM in the U.S., Canada and Australia. These products were designed to enhance the performance of hydraulic fracturing. New fluids were developed in response to customer needs for a fluid that performs better and causes less formation damage in CBM and CMM fields. Before Halliburton introduced these products, there were no fit-for-purpose fluids for these conditions. The new Halliburton products having been successfully tested in 2007 in the San Juan Basin are now available for commercial use in other areas.

Drilling Technologies

Eighty percent of future gas in the Lower 48 states lies beneath protected lands. Halliburton’s Geo-Pilot® rotary steerable drilling system and the Landmark DecisionSpace suite of technologies are ideally suited for such environmentally sensitive areas.

The Geo-Pilot system reduces environmental impact by enabling operators to drill multiple long-distance wells in all directions from a single drillpad. Landmark’s DecisionSpace visualization technologies illuminate the drilling environment so accurately that drilling work can often be performed more safely and efficiently away from the drillsite.

Managing Produced Water

The global energy industry relies on significant volumes of water to accomplish drilling, cementing, fracturing and other operations that are critical to producing hydrocarbons. In the past, the products for these operations were based on clean, potable

water. With the expansion of global population, increasing development of oilfields in remote areas, and, in some cases, drought, Halliburton recognized the need to apply our chemistry expertise to developing new oilfield products that use alternate sources of water such as produced salt water.

Moving to such a solution addresses the potable water challenge while minimizing the costs of another oilfield activity. By utilizing produced salt water, Halliburton provides a practical application for produced water and eliminates the operator’s costs for its disposal. Halliburton’s use of produced water for well service activities also minimizes the use of potable water for this industrial application.

The alternative water-use project involves developing variations of standard Halliburton products to achieve more salt tolerance. The project includes developing equipment that mechanically and chemically modifies typical produced saltwater to a standard, workable level. These projects are under way and some are in the testing and evaluation phase.

In addition, Halliburton is commercializing it's CrystalSeal™ service to solve the problem of produced water in injection wells. CrystalSeal swellable polymer is pumped into an injection well to shut off the direct connection from the injection well to the producing well. In 2006 and 2007, we performed approximately 130 jobs with CrystalSeal in the Permian Basin.

Health, Safety and Environment Audits

Halliburton’s board of directors’ Health, Safety and Environment (HSE) committee was established in 1990. It comprises a minimum of three directors, all of whom must be independent. The HSE committee

generally meets twice each year to provide oversight and support of HSE policies, programs and initiatives.

Internal HSE audits are carried out under the direction of the HSE committee through a corporate HSE audit group within Halliburton’s Environmental Law Department. Separating the audit function from Halliburton operations supports an impartial audit process. The corporate audit results are presented twice each year to the HSE committee. HSE audits are scheduled annually based on a risk-ranking profile conducted on all company operations, with high-risk locations placed on a three-year audit cycle. In 2007, the company performed 54 internal HSE audits, compared with 44 in 2006.

Our HSE standards set forth the requirements for HSE audits. Biennial HSE site self-assessments utilizing the same audit protocols from the corporate audit group are performed at all operating facilities or job sites. Line management is responsible for implementation of this process. Both corporate audits and site self-assessments measure performance against regulatory requirements, company standards and client requirements. The corrective action process includes review and follow-up by executive and operations management to ensure that corrective actions are completed quickly and to eliminate any barriers to closing audits in an expeditious manner.

Fines/Penalties/Remediations

Halliburton is subject to numerous environmental, legal and regulatory requirements related to our operations worldwide. As stated in our COBC, our policy is to comply with all environmental, legal and regulatory requirements of states and countries where we do business. However, in 2007, we paid fines or penalties associated with regulatory issues of $20,330 for non-compliance issues.

90016halD1R1.indd 26 4/23/08 1:43:34 PM


As part of our compliance program and to avoid future liabilities, we assess and remediate contaminated properties as necessary; as of this report, approximately 100 sites are being remediated. We have established a $72 million reserve for site remediations. These reserve funds have increased significantly in 2007 as a result of various site-specific issues that were in arbitration and that were ruled on during 2007.

HSE and Service Quality Management Systems

ISO and OHSAS Compliance

We continue to utilize International Standards Organization (ISO)-compliant HSE management systems across our operations. We are not planning to certify to ISO 14000 or Occupation Health and Safety Assessment Series (OHSAS) 18000 globally. However, based on local business needs, we have maintained our number of ISO-certified locations at 35, and OHSAS certifications have increased from 10 to 20 in 2007. Six of Halliburton’s seven U.S.-based manufacturing facilities are participants in the U.S. Department of Labor Occupational Health and Safety Administration’s (OSHAs) Voluntary Protection Program. These facilities, located in Duncan, Oklahoma; Broussard, Louisiana; Carrollton, Conroe, Houston and Alvarado, Texas, are recognized by OSHA as “Star Program” sites for their exemplary, comprehensive safety and health management systems, and for achieving injury and illness rates below the national average for our industry group.

Service Quality

Though a perfect job may seem like an unattainable goal, Halliburton is working to make it a reality. In 2003, we developed the Done Right® Services

Index (DRSI), a system for measuring our overall job performances. It is based on a composite of five key indicators:

Zero HSE incidents•

Zero cost of poor quality•

Zero nonproductive time•

Job purpose achieved•

Customer satisfied.•

The DRSI helps us monitor and improve our quality and change behaviors by discovering opportunities for improvement. The DRSI remains a key measure of Halliburton’s performance and the level of excellence in our service delivery. Overall service quality objectives in 2007 were: to measure and improve service quality performance; to achieve service quality and HSE results using the established Halliburton Management System; and to communicate our performance to our customers, employees and stakeholders.

The 2007 DRSI target was 94 percent. Halliburton achieved a 2007 DRSI of 96.2 percent, compared with 92.9 percent in 2006. Our customers have increasingly come to accept the DRSI as the relevant and critical measure of our job performance at the wellsite. Service quality remains a strong core value and helps define Halliburton as a customer-focused organization (see chart on page 9).

HSE Fines/Penaltiesin thousands of U.S. dollars

247

209

20

*2006 data includes $198,000 in fines for hazardous material packing violations from the U.S. FederalAviation Administration.

20072006*20052004

HSE Notices of Violations/Citationsexcluding vehicle-related violations and citations

43

61 64

55

2007200620052004

Reported Environmental Incidents

594653

834745

2007200620052004

Non-Hydrocarbon Liquids

Hydrocarbon Liquids

Environmental Spillsin cubic meters

240

57

165220

105

276

35

600

192

2007200620052004

90016halD1R1.indd 27 4/23/08 1:43:35 PM


Senior Technical Services representative in Mumbai

nobody imagined, back in 1997, when Halliburton launched its performance improvement initiative, that it would yield the kind of

signifi cant human results that it has.

Ways in which pii teams around the world have embraced the spirit of the company’s commitment to improving its performance as a corporate

global citizen are almost as varied as the countries in which we do business.

one example that illustrates the wonderful results of this process is a project undertaken by our pii team in Mumbai, india. in 2006, the team created

a special project as part of the program for Community Welfare, and it took pii to a whole new level. i am proud to say that i was,

and still am, a part of that team.

near the Halliburton offi ces in Mumbai, there is a residence called the Home for the aged. Started as a response to the desperate conditions

in which many elderly indian men and women live, the Home for the aged is run by the little Sisters of the poor, a group of 20 nuns who

care for the 150 elderly residents. they off er food, shelter, recreation and medical services, as well as spiritual companionship, although

neither religion nor caste enters into the Homes acceptance process, which is based solely on need. the Home in Mumbai is part of the

Society of the Home for the aged, an international charity that supports care for the aged poor in 32 countries on fi ve continents.

our pii team met with the Mother Superior, asking how Halliburton could help. it was agreed that Halliburton would provide some 30 liters (about

32 quarts) of milk per day for the next six months. employees were encouraged to participate in the program through opportunities for donations

and volunteering. a group of pii team members began making monthly visits to the Home, engaging with both the nuns and the residents.

all this began over a year ago. the six months have come and gone. We’ve donated money to buy kitchen

and medical equipment and our team is still providing milk and still visiting monthly.

it’s a good feeling knowing that my fellow employees put their hearts and their hands where the company’s policy is – into our

communities. there is no better mark of a good neighbor than a willingness to pitch in and extend a helping hand when it is

needed. and it’s a clear expression of one of the most signifi cant facets of our identity – a caring, dynamic global citizen.

Social Profi le

90016halD1R1.indd 28 4/23/08 1:43:42 PM

90016halD1R1.indd 29 4/23/08 1:43:47 PM

Sustainable Relationships: It starts with respect.

Becoming the “Preferred Employer”

In harmony with our corporate vision – to be the preferred provider of oilfield services – is our Human Resources vision: To be the preferred employer. This means attracting, hiring, developing, promoting, rewarding and retaining the right people at the right time and at the right place.

Our efforts toward accomplishing this goal are founded on our commitments to embracing fair labor practices and maintaining decent work environments in all our locations and facilities. Our workforce reflects the diversity of the communities where we operate; approximately 92 percent of our total workforce is localized. We currently employ men and women of 121 nationalities. We are uncompromising in our policy of offering equal employment opportunities to all qualified individuals, and we work to provide every employee worldwide with safe, healthy working conditions that meet or exceed every regulatory requirement.

We provide our employees with extensive training and education opportunities, along with numerous tools and resources to help them multiply and expand their competencies and to develop their careers. Approximately 25 percent of employees were promoted in 2007 (roughly the same as in 2006). We foster a performance management culture with our People, Performance, Results (PPR) process for setting goals, measuring performance and directing professional development.

In 2007, Halliburton ranked No. 8 in the Houston Business Journal’s “Best Places to Work” list, among Houston companies with more than 500 employees, advancing from No. 12 in 2006. To determine the rankings, the Houston Business

Journal anonymously surveyed random employees, asking for feedback in 10 categories such as team effectiveness, alignment with goals, trust in senior leaders and work engagement. We were the only energy-related company in our catagory to earn a place on the list, out of a total of 180 companies nominated.

Recruiting in a Competitive Environment

As more and more employees retire from our industry, companies are competing to attract new recruits to the workforce, train them to replace the more experienced retirees and then retain them to provide the experience needed in the long term. In recruiting targeted talent, we emphasize Halliburton’s global diversity, our record of technical leadership and innovation, and the advantages of our state-of-the-art equipment and cutting-edge training.

Halliburton has developed an integrated approach for drawing to our company the top-tier professionals we need now and into the future. We have a growing program for establishing relationships with educational institutions around the world. Many institutions receive donations of software and financial resources from Halliburton. Our top professionals teach in engineering- and business-related programs at dozens of universities and colleges, and we hold an extensive range of campus recruiting events. In 2007, our thriving internship program employed more than 200 interns in operations and support groups in Canada, China and the U.S. Even at the high-school level, we are planning for the future of our company and our industry: Our employees lead specialized courses for math and science students in high schools around the world.

We are aggressive in our efforts to recruit top candidates, from fresh college graduates to seasoned industry professionals. We have instituted new programs designed to accelerate

Europe/Eurasia

Middle East

Africa

Asia Pacific

Canada

United States

Latin America

93%

58%

75%

88%

99%

99%

95%

2006

93%

55%

76%

87%

99%

99%

95%

2007

Employeespercentage of local nationals in regional workforce

12.0%

6.6%

8.4%

8.5%

3.8%

13.1%

9.1%

5.3%

12.7%

20.5%

13.0%

7.1%

8.9%

8.3%

2.9%

12.8%

10.0%

4.9%

13.7%

18.3%

2006 2007

2007 Employeespercentage of total workforce by region

Europe/Eurasia

Middle East

Africa

Asia Pacific

Canada

U.S. Northern

U.S. Southern

U.S. Gulf Coast

Latin America

Misc. Other


90016halD1R1.indd 30 4/23/08 1:43:47 PM

professional development and broaden career planning, and we have made structural changes to help streamline our Human Resources organization for improved responsiveness and accessibility. Our long-term goal, of course, is to retain the powerful workforce that we build through these recruiting and development efforts.

Some results of this approach:

More than 36,500 employees •hired in the past three years

Rising revenue per employee•

Ninety-two percent localized workforce•

Decreasing voluntary turnover•

Reduced engineer breakout time•

Improved safety performance•

Increased service quality•

Highest employee engagement •score on record

Average training hours per •employee increased 20 percent in 2007 compared to 2006.

Training and Education

Halliburton offers our employees extensive opportunities for training and development. To meet the increasing need for technical training, we opened our 12th regional training center in Tyumen, Russia, in February 2007. This training center, our first in Russia, is operated in cooperation with the Tyumen State Oil and Gas University and will focus on developing the skills of our employees in the Europe Eurasia Region. The center is equipped with three classrooms, a laboratory and state-of-the-art video-conferencing equipment that gives students access to our technical experts around the globe.

In addition to opening new technical training venues, Halliburton has initiated an accelerated competency development program for field operations employees. Our program allows employees to design their own plan for enhancing their competencies and for advancing (or redirecting) their careers. Through our employee survey, we confirmed that career development and progression aid retention. In response, we developed an online tool, “Moving Employees To The Right Opportunities” (METTRO) to help employees map out their career paths and implement professional development plans. In 2007, our METTRO Web site averaged 10,000 hits per month.

Our online learning management system, I Learn, offers courses through both online curriculum and instructor-led training. Halliburton employees received over 3 million hours of training in 2007, an average of about 66 hours per employee.

President’s Leadership Excellence Program

A program specifically created to develop future leaders for our company, the President’s Leadership Excellence Program (PLEP) offers a small and elite group of hand-selected professionals the opportunity to work as teams to solve real-life, up-to-the-minute

issues facing the company now. For 2007, the four teams addressed challenges relating to “people”:

Effective use of global •universities for recruiting

Effectively integrating people into the •organization following an acquisition

Managing the frontline field workforce•

Managing the experienced •field operations workforce.

Working in these teams, under the sponsorship of experienced, upper-management mentors, the participants study their assigned issues, formulate workable solutions and, on “graduation” day, present their plans to the CEO and other members of the executive management team. In December, the


1.751.97

2.32

3.15

Employee Trainingin millions of hours

2007200620052004

90016halD1R1.indd 31 4/23/08 1:43:48 PM

CEO and members of the executive committee meet with a member of each team to go over the recommendations in further detail. Th e executive committee identifi es the ideas it believes will bring the most value to the company, and action plans are developed for their implementation. Some of the most innovative and successful ideas have emerged from the PLEP, and it is a highly respected program that serves as a valuable training ground for the company’s future leaders.

Performance and Career Development Reviews

All regular, full-time, nonunion Halliburton employees are required to participate in the annual People, Performance, Results (PPR) process. Working with their supervisors or managers, employees complete the PPR process by assessing their competencies, setting goals for the next year and establishing measurable, meaningful ways to evaluate the employees’ progress toward those goals. Th e PPR process includes areas defi ned by the individual’s specifi c responsibilities, and it also has sections on Health, Safety and Environment (HSE) and ethics that are mandatory for all participants. Th e PPR process holds employees and supervisors accountable and provides a clear way to track progress toward objectives that are both of benefi t to the employees and in support of the company’s strategies.

Th e company has set a goal of having 100 percent of our eligible employees complete an annual PPR; accordingly, managers are held accountable for completing reviews for all of their employees. In the fi rst quarter of 2007, approximately 91 percent of eligible participating employees received their annual PPR appraisals and career development reviews for performance year 2006.

Occupational Health and Safety

At Halliburton, we know that the well-being of our employees is critical to our success and long-term sustainability and we believe that improvement in our performance must be pursued relentlessly. Th e Performance Improvement Initiative (PII), our annual company-wide performance improvement process, supports and promotes that commitment.

Th e executive leadership, together with the HSE and Service Quality teams, outline broad yearly strategic PII objectives and provide tools and guidance to assist local teams in meeting these objectives. With input from employees and support from local company leadership, each geographic region or country develops a plan to meet annual targets within the context of its own customs, culture and values.

Th e PII focus areas for 2007 were leadership visibility and accountability, process management, targeted metrics and employee engagement in PII principles and objectives. Major health and safety objectives in 2007 were to eliminate fatalities and to deliver continuous improvement toward an incident-free workplace.

Unfortunately, we had four employee fatalities in 2007: one vehicle-related and the other three associated with work at wellsites.

Th e 2007 Lost Time Incident Rate (LTIR) was reduced from 0.30 in 2006 to 0.24 for 2007. Th e Total Recordable Incident Rate (TRIR) of 0.96 was down slightly from the 2006 rate of 1.04. Th is 2006 rate is slightly diff erent from what was shown in last year’s corporate sustainability report due to reclassifi cation of incidents from an internal record-keeping review.


International Association of Drilling Contractors Industry Average

0.33

0.24

0.350.30

Lost Time Incident Ratesper 200,000 work hours

0.56

20072007200620052004

0.770.73

0.70 0.70

Recordable Vehicle Incident Ratesper million miles traveled

2007200620052004

International Association of Drilling Contractors Industry Average

1.10 1.100.96

2.13

1.04

Total Recordable Incident Ratesper 200,000 work hours

20072007200620052004

90016halD1R1.indd 32 4/23/08 1:43:51 PM

Th ese reductions in incident rates occurred even as hours worked increased approximately 15 percent in 2007 compared to 2006. Furthermore, both incident rates are signifi cantly better than the average rates reported by the International Association of Drilling Contractors.

Our employees drove more than 281,700,000 miles in 2007, a 6 percent increase from 2006. Our 2007 Vehicle Recordable Incidents Rate remained the same, compared to 2006, and, as mentioned above, we had one employee fatality related to a vehicle incident in 2007.

Health Education

Halliburton off ers our employees and their families a variety of programs to help prevent and manage serious diseases. Th e Halliburton Management System outlines standards and performance criteria for protecting employees from diseases in their areas of operations by minimizing the risk of exposure to disease. Our disease-protection standard calls for identifying and evaluating diseases at a local level, communicating risks to employees, relating procedures to obtain medical assistance, following health authority recommendations and providing aff ected employees with a health advisory package. If local, country or contractual requirements exceed Halliburton’s standard, then those requirements are followed.

Employee Assistance Program

Life events, family issues and personal problems can aff ect the workplace, from interfering with the satisfaction of an individual worker to aff ecting the productivity of an entire team. Halliburton recognizes the positive role the company can play in helping

employees handle diffi cult times. For any person who needs assistance and support in such circumstances, Halliburton provides the Employee Assistance Program (EAP).

Based in Houston, the program is available 24/7 in the U.S. via a toll-free number, and also outside the U.S. where the toll-free number is accessible. An external provider fulfi lls EAP services in the U.K., Canada, Australia and Argentina. Th e company’s long-term goal is to provide local EAP services throughout our worldwide operations.

Employees may voluntarily seek assistance from the EAP, or they may be referred by their supervisors. In the fi rst six months of 2007, employee utilization of the EAP increased 15 percent compared to 2006. During the same

period, supervisory referrals increased 39 percent. However, the second half of 2007 showed a dramatic change that, annualized, indicates a 45 percent increase in employee utilization and a 91 percent increase in supervisory referrals. In a survey, approximately 95 percent of supervisors who referred employees to the EAP indicated satisfaction with the EAP’s services and outcomes, and said they would make referrals again.

Dispute Resolution Program

Th e design and success of Halliburton’s Dispute Resolution Program (DRP) have achieved national and international acclaim. Following a careful assessment by the Texas Supreme Court, Halliburton’s DRP was found to provide “due process” and passed the “fairness test.”

Since its introduction in 1998, nearly 3,000 employees representing 32 countries have brought matters to the DRP. Disputes resolved have involved employees from every level of the company and have concerned issues ranging from minor misunderstandings to alleged violations of legally protected rights.


less than5 days

1 weekor less

2 weeksor less

3 weeksor less

4 weeksor less

2 to 3months

3 to 6months

more than6 months

On average, 68 percent of all cases areresolved in one week or less; 83% are resolved in four weeks or less.

Dispute Resolution Timelinecases resolved

(continued on page 36)

90016halD1R1.indd 33 4/23/08 1:43:55 PM


Halliburton Brazil approaches community relations not as simple conformance to the expectations – legal, social and cultural – of the community, but as a pervasive strategy. Employees are encouraged to participate in volunteer activities as well as in fundraising efforts. Our programs have included initiatives relating to sustainable development and environmental management, safety, training, diversity and human rights. In short, our commitment to community

relations touches every aspect of our business and has become a key criterion by which we measure our success.

In 2007, much of our effort focused on educational and social issues, supporting public schools, social agencies and youth activities. Halliburton Brazil donated $20,000 in direct financial support for education programs in area schools, and we provided 25 employees as volunteers for special events, totaling 130 volunteer hours.

Education Programs

Working with the Halliburton Education Assistance and Resource Team (HEART), the Halliburton Brazil team has contributed in a variety of ways to the Centro Federal de Educação Tecnológica (CEFET), the public technical school in Macaé, outside Rio de Janeiro, Brazil. Halliburton supports an education development program focused on raising the level of education and improving the skills of students from low-income families in order to increase their employability.

Seven senior-level employees gave technical presentations for approximately 220 students at CEFET.

We hosted 140 students, ages 16 to 23, from four area schools in visits to our base in Macaé.

We raised $8,000 to donate used and new equipment for laboratories: Ten computers (donated from Information

Brazil: Country Profile

90016halD1R1.indd 34 4/23/08 1:43:58 PM


Technology), a consistometer (from Cementing and Production Enhancement), an analogical oscilloscope, a data projector, a digital multimeter, a decibilimeter and a digital terrometer wire cutter.

Halliburton also participated in a social responsibility program in partnership with Centro de Integração Empresa-Escola (CIEE), an organization focused on preparing students for the market. Halliburton funded two CIEE workshops on the environment and career management. These initiatives benefited more than 30 students, many of whom are already working in the industry.

Our forward-looking support for educational opportunities has benefits for the students, their families, their communities and, ultimately, for Halliburton. By opening more educational possibilities for young people, we are preparing them to take a productive role in the future of their country, and it is a future in which Halliburton expects to play a strong and valuable part.

Supporting Social Institutions

Halliburton employees give a wide range of support to social institutions, such as daycare centers and homes for the elderly. Forty-three volunteers from all around the country make weekly visits to these institutions. They have also gathered donations of building materials such as bricks and flooring to help rebuild a classroom at one of the daycare centers.

Every year, Halliburton’s major bases in Brazil participate in the Internal Week of Accident Prevention (SIPAT). In 2007, employees added a new dimension to SIPAT by collecting 2,577 kilograms (5,681 tons) of nonperishable food for donation to charity institutions. Employees at the Macaé base raised $2,440 for the purchase of a machine used in making personal hygiene products. The machine was given to the Asilo Santo Antonio, a home for the elderly.

Halliburton has had a positive and productive presence in Brazil for half a century, in part because we have worked to establish ourselves as a good neighbor in those communities where we do business. Through our community relations efforts, we are making a difference not just in the economic well-being of Brazil, but also in the lives of its people.

90016halD1R1.indd 35 4/23/08 1:44:00 PM


$2.23$1.99

$2.19

$3.01

Halliburton Foundation (cash)in millions of U.S. dollars

2007200620052004

$2.25

$3.10

$2.34

Direct Cashin millions of U.S. dollars

$2.36

2007200620052004

$136.2

$227.0

$360.1$347.3

In-Kind Donations (non-cash)in millions of U.S. dollars

2007200620052004

$231.2

$141.5

$364.6 $352.6

Total Contributionsin millions of U.S. dollars

2007200620052004

Corporate Giving The DRP is administered by ombudsmen who adhere strictly to the code of ethics and standards of practice of the International Ombudsman Association. The code is defined by three key principles: neutrality, independence and confidentiality. Communication with the DRP is considered privileged and, as such, does not constitute notice to the company.

Senior management has shown unfaltering support for the DRP and strong confidence in its effectiveness, with the result that about 91 percent of cases have been resolved internally. Addressing interpersonal conflict internally allows for quicker resolution, repairs damaged relationships and fosters better working environments. Not only does internal resolution save time and money, but research has also shown that it has a direct, positive impact on safety performance, customer satisfaction, productivity and employee retention.

Community Impact: It starts with being good neighbors.

Being a considerate and helpful neighbor has been fundamental to Halliburton’s culture from the earliest days of the company. We believe that improving the quality of life in the communities where we operate is good business, and that business goals and social goals must be compatible for Halliburton to remain a leader in the world market.

Community Relations Overview

Halliburton gives back to communities through corporate financial contributions, employee giving and employee volunteerism. In 2007, Halliburton’s corporate giving totaled $352.6 million to hundreds of nonprofit organizations around the globe. These funds supported education, health and social services

organizations; the environment; the arts; and other life-enriching programs. The organizations that are supported by the company are primarily those that are important to, and in many cases selected by, our employees.

A major focus of the company’s giving is education. In 2007, Halliburton Foundation Inc. contributed $3.01 million to elementary, secondary and higher education institutions worldwide. Through its University Software Grant Program, Halliburton provided software valued at $348 million to 59 universities in 18 countries to use as learning and teaching aides. Using cutting-edge Landmark software in college accelerates the learning curve for engineering and geosciences students. In addition, when they enter the workforce, they are equipped to be more productive more quickly. More than 300 software grants have been awarded since 1996 to institutions in several countries including the U.K., Newfoundland, Nigeria, the United Arab Emirates and Kazakhstan.

Employee Giving

Our Giving Choices program enables employees to make contributions to charities they select and to receive a 10 percent matching donation from Halliburton. The program – which has been available in Australia, Canada, the U.S. and the U.K. – was expanded this year into seven Middle Eastern countries, timed to coincide with the Muslim holy month of Ramadan. Overall, Halliburton employees pledged $2.9 million to approximately 1,080 charities worldwide in 2007.

Our employees’ impulse to generosity stirs them to give of their time and energy, too. To help employees find opportunities that match their passions and personal commitments, Halliburton

90016halD1R1.indd 36 4/23/08 1:44:01 PM

encourages participation in Halliburton Volunteer Councils (HVCs). There are eight active HVCs in the U.S. and one in Canada, with startup HVCs in Dubai, United Arab Emirates; Yemen; Pakistan; Kuwait; Saudi Arabia; Oman; India; Mexico; and Argentina. HVCs partner with local charities, focusing efforts on the immediate needs of the community. Activities in 2007 included Habitat for Humanity building projects; walks, bike rides and races for muscular dystrophy, diabetes, breast cancer, AIDS and other catastrophic diseases; care packages and greetings cards for men and women in U.S. military service; and hundreds of other projects throughout the year.

Human Rights

Halliburton supports basic human rights and does not under any circumstances knowingly abuse these rights. We believe all employees should be treated with dignity and respect, and we insist that this belief be put into practice at all times in every workplace. We are committed to equal employment opportunity for all qualified individuals in hiring, promotions, training and all other aspects of employment, and we endeavor to create a workforce that reflects the diversity of the communities where we work.

Our Code of Business Conduct (COBC) prohibits spoken, written, physical, sexual and racial harassment. It also prohibits unlawful discrimination against employees, shareholders, directors, customers and suppliers on the basis of race, color, age, sex, sexual orientation (added in 2007), religion or national origin.

Halliburton does not employ forced, compulsory or child labor. We uphold freedom of association. We employ approximately 1,830 workers affiliated

with labor unions in Argentina, Australia, Nigeria, Norway and the U.S. Our U.S. union employees work in New Orleans, Louisiana, for Local No. 270 General Truck Drivers, Chauffeurs, Warehousemen and Helpers, and in Colony, Wyoming, in Local No. 353C of the International Chemical Workers Union Council/United Food and Commercial Workers.

Bribery and Corruption

Halliburton’s COBC clearly mandates compliance with U.S. and foreign laws and regulations related to commercial bribery, antitrust issues and competition. Included among these is the U.S. Foreign Corrupt Practices Act (FCPA). Halliburton's policy prohibits bribery and corruption, undue influence in public policy making and monopoly practices.

Halliburton’s policy prohibiting bribery is covered in our general COBC training. Since 2006, we have offered an online course focused specifically on the U.S. FCPA, with versions in English, Latin American Spanish, Brazilian Portuguese and French. A Chinese version was made available in 2007. The FCPA course is required for certain groups of employees. As of the end of 2007, 76 percent of approximately 8,000 targeted eligible employees had completed the FCPA course.

The company often enters into business relationships with persons and companies outside the U.S. Certain international business relationships, such as sales representative agreements, are subject to Halliburton’s system of controls and require the other parties to comply with the company’s separate Code of Business Conduct for International Business Relationships.


13.514.6

21.4

33.5

COBC Trainingin thousands of training courses completed

2007200620052004

90016halD1R1.indd 37 4/23/08 1:44:01 PM


Anti-Competitive Policy

The antitrust laws of the U.S. and other countries prohibit agreements or actions that might eliminate or discourage competition, bring about a monopoly, abuse a dominant market position, artificially maintain prices or otherwise illegally hamper or distort commerce.

Halliburton does not tolerate any activity that violates antitrust laws applicable to the company’s business. Company policy prohibits any director, employee or agent of the company from entering into any behaviors or actions with any competitor that violates any antitrust laws. Halliburton’s Law Department guides, advises and, in many cases, pre-approves and coordinates any activities or issues that might have antitrust implications. Our complete antitrust policy can be viewed at www.halliburton.com.

HALPAC

The Halliburton Political Action Committee (HALPAC) was created

to raise money and make financial contributions to selected political candidates, with the aim of helping to elect U.S. local, state and federal political candidates who support pro-business initiatives. HALPAC also contributes to candidates who champion specific issues that are important to Halliburton’s success and the welfare of our employees and is independent of any political party, candidate or organization. It draws from the suggestions of HALPAC members to determine which candidates or officials, regardless of party affiliation, it will support. HALPAC is funded by the voluntary contributions of eligible Halliburton officers and employees who are U.S. citizens. The company provides a matching contribution to the charity of the employee’s choice for each employee donation to HALPAC.

HALPAC’s activities are regulated by the U.S. Federal Election Commission (FEC). Accordingly, HALPAC complies with all FEC disclosure and reporting requirements, including disclosure of any political contributions over

$200. In such cases, the identity of both donor and recipient are available to the public from the FEC.

Supplier Qualifications

For the last year, Halliburton has used a standardized score card to evaluate potential strategic suppliers for possible work and to rate the performance of current strategic suppliers. The score card sets out criteria in four areas: financial excellence, operational excellence, strategic fit and alignment with Halliburton’s social, economic and HSE values. We use the same rating scale that is used to measure the performance of Halliburton employees in our PPR process.

To meet our expectations for alignment with Halliburton values, key strategic suppliers must measure their own performance using a centralized system, demonstrate compliance with regulations, meet regulatory standards as appropriate and demonstrate improvement year-over-year. We review

90016halD1R1.indd 38 4/23/08 1:44:03 PM

the performance of established suppliers twice each year and require corrective action if they do not meet expectations.

Product Responsibility: It starts with diligence.

As discussed elsewhere in this report, Halliburton’s HSE policy, a part of our COBC, requires that we continuously evaluate the HSE impacts of our products and services, with the goal that they cause the smallest environmental impact, are safe in their intended use, consume energy and natural resources efficiently and can be recycled, reused or disposed of safely.

Divisions within the company may have specialized processes in place for addressing HSE matters that are particularly pertinent to their aspect of the company’s business. Following are a few examples.

Completion Tools

HSE reviews are conducted on every product as part of the overall development process. During design reviews, standardized checklists are used to assess product design for its potential impact on human health and safety and on the environment during manufacture, use and (where applicable) disposal. Human and environmental concerns are then included in the product’s operating manual and covered in training as needed.

Product HSE Assessments

The management team of the Duncan Technology Center in Duncan, Oklahoma, has integrated HSE considerations into its product development processes. In 2007, cross-functional teams in Duncan used risk-assessment tools and Kaizen methodology to ensure that HSE risks are identified and addressed throughout the life cycle of each new

product. Also in 2007, Duncan teams began conducting risk assessments and documenting them as part of the product development project files. Internal customer feedback will be used to improve the risk-assessment process.

Halliburton’s Baroid Fluid Services group has also made environmental assessment a part of the formal product development process. The new chemical introduction process for fluids includes HSE assessments at two stages: first, during the product needs assessment, and, again, prior to product commercialization.

Replacing Radioactive Devices

Halliburton is reducing health and safety risks by replacing radioactive densometers in certain tools. We are in the process of using mass flowmeters to replace radioactive densometers in the cement mixer recirculating line in cementing trucks and trailers. A high-pressure vibrating tube densometer will replace the radioactive densometer used in high-pressure density applications. This safe technology is being used in a larger-capacity densometer for production-enhancement fracturing applications.

Product and Service Labeling

Halliburton complies with applicable laws concerning product and service labeling. This includes providing Material Safety Data Sheets (MSDSs), which are required by the Occupational Safety and Health Administration (OSHA), as part of a comprehensive hazard communications program. Registered users of www.myhalliburton.com have access to more than 4,100 Halliburton product MSDSs in eight regional formats and languages.



Halliburton Score

Dow Jones Sustainability IndexOverall Score Social DimensionMaximum possible score = 100

3440

3632

48 46

58

70 72

27

52

69


2007200620052004

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Table of Contents

2Chief Executive’s Message

4Organization Pro� le

10Economic Pro� le

19Environment Pro� le

28Social Pro� le

Major Operating Hubs

12 in the Western Hemisphere14 in the Eastern Hemisphere

Previous Reports

ConnectingPublished in June 2006, forcalendar year 2004-2005

Corporate Sustainability Report 2006Calendar year 2006

Current ReportCalendar year 2007

Report Parameters

Reporting period:Calendar year 2007

Date of most recent previous report: 2006

Reporting cycle:Annual

For more information or additional copies, please contact:

Halliburton Global Sustainable Development Manager1401 McKinney Street, Suite 2400Houston, Texas 77010United States

[email protected]

Boundary of the report: All countries, product service lines, joint ventures and non-wholly- owned subsidiaries are included in � nancials only.

Global Reporting Initiative Index

Strategy and Pro� le Strategy and Analysis 2, 6 Organizational Pro� le 4 Report Parameters inside back cover Governance 8 Signi� cant Performance Indicators 9

Economic Economic Performance 10 Market Presence 12 Indirect Economic Impact 15, 16

EnvironmentEnergy 23

Water 23 Emissions, E� uents, Wastes 23 Products and Services 23 Compliance 27

Social Labor Practices 30 Community 36 Human Rights 37 Product Responsibility 39

Halliburton believes

that sustainability issues are key drivers

for our business, and we’re taking steps to incorporate

this mindset into all of our business practices.

We hope that, through educating our employees

on the business implications of sustainability,

they will be encouraged to pursue their own

individual sustainable endeavors.

A� er all, it starts with all of us.

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HALLIBURTON

© 2008 Halliburton. All Rights Reserved Printed in USA H06075 Produced by Halliburton Communications

Printed on FSC-certi� ed paper that is

100% post-consumer � ber. FSC certi� cation

ensures that this paper meets Forest Stewardship

Council standards for responsible forest

management. � is paper is also certi� ed as

Processed Chlorine Free (PCF) by the Chlorine

Free Products Association. It is manufactured

without the use of chlorine chemistry and

is made from sustainable raw materials.

Our choice of paper has saved:

48 trees, which supplies oxygen

for 24 people annually

17,500 gallons of water,

or 1,017 eight-minute showers

33 BTUs of energy

4, 216 pounds of emissions

2,247 pounds of solid waste

Cert no. SCS-COC-00648

HALLIBURTON

Corporate Sustainability Report

It starts with me.

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it starts with me. - socially responsible investing · halliburton is an oilfi eld services...

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