Halliburton Oil and Gas

Halliburton Company is a world leader in energy services, as well as engineering and construction. The company has two main business segments: the Energy Group, which offers a broad range of services and products used in the exploration, development, and production of oil and gas; and the Engineering and Construction Group, which designs and constructs major projects, including chemical plants, refineries, and paper mills. Halliburton, which has operations in more than 100 countries, announced in early 1998 that it would merge with Dresser Industries, Inc. to create the number one energy services firm in the world. Early History One of Halliburton's numerous service operations is oil well cementing. This process protects oil from contamination by underground water, strengthens the walls of a well, lessens the danger of explosions from high pressure oil and gas, and protects fresh water veins from contamination by oil. It was the first service offered by company founder Erle Palmer Halliburton. Erle Halliburton learned the cementing technique in California, during a period of employment with the Perkins Oil Well Cementing Company that began and ended in 1916. Fired for suggesting too many method changes, he decided to utilize the engineering and hydraulics he had learned in the U.S. Navy, and go into the cementing business on his own. He borrowed a pump and wagon, pawned his wife's wedding ring to finance his venture, and moved to Burkburnett, Texas, to introduce his services to the oil industry. Halliburton's method met with little interest in Texas. Undaunted, he transferred his operation to Oklahoma. Here his luck soon changed, bringing the need for additional equipment, a patent for his process, and efficient management. To cope with these needs and increasing demands for his service, in 1920, Halliburton organized the Halliburton Oil Well Cementing Company. One year later, 17 trucks carried his crews and equipment to drilling sites in Louisiana, Arkansas, and other oil-rich areas from a base in Wilson, Oklahoma, as well as from the new company headquarters in Duncan, Oklahoma. Part of this growing reputation came from uncompromisingly reliable service, which was enhanced by new equipment invented by Halliburton to meet the needs of each project. One creation that revolutionized the oil industry was the jet mixer, a mechanized mixer that did away with hand-mixing of the minimum 250 bags of cement and water slurry needed for each well. Because it could control the proportions of cement and water, it eliminated wasted slurry that would harden before it could be poured. By 1922 the company owned $14,000 worth of equipment and was paying some of its cementers $300 monthly. Two years later, Halliburton with his wife, Vida, as his partner, set out to expand. To finance this they converted their partnership into a corporation and offered a substantial interest in their business to other oil companies. Their trump card lay in their meticulous patenting of all new processes and devices, which had left the oil companies unable to have oil wells cemented without using Halliburton services. Company patents also covered processes designed for well recementing, a maintenance necessity that gave the Halliburtons relative independence from competitors. In 1924 the Halliburton Oil Well Cementing Company became a corporation in Delaware. The Halliburtons held 52 percent of the stock, and the Magnolia, Texas, Gulf, Humble, Sun, Pure, and Atlantic oil companies jointly held 48 percent. So as to retain equal voting rights with their partners, the Halliburtons placed 4 percent of their stock in a voting trust. By the time the company reached its ten-year milestone in 1929, research and development had improved processes and equipment to the point where a mixture made up of 2,500 sacks of cement could be injected into a well in 48 minutes. By 1929 the use of four new company planes made for speedy contract completion. Marking this important anniversary was the Halliburton entry into Canada, as well as offering for sale a wide range of oil well apparatus. The 1930s saw automobile production soar from 2.3 million vehicles in 1931 to 4.5 million by 1940. Domestic oil heating became more popular, growing from 100,000 homes supplied in 1929 to 2 million by 1940. Both circumstances benefited the oil industry. As the decade ended, oil and gas were supplying 44.5 percent of the U.S. total energy requirements. Halliburton's expansion kept pace with demand. In 1932, it opened four new branches, enabling it to send 75 cementing and well-testing crews to sites in seven states. The company introduced bulk cementing to replace hand moving of heavy cement sacks. Eager to participate in the marine oil exploration taking place in the Gulf of Mexico, Halliburton also began to mount equipment on ships and barges. In 1940 the Halliburtons bought Perkins Cementing Company, extending operations to the West Coast and the Rocky Mountain region. In the same year, the company established its first South American subsidiary, in Venezuela. These two moves were profitable; just one year later, earnings reached $13.5 million, of which $2 million was net profit.