Halliburton Moving C.E.O. From Houston to Dubai
By CLIFFORD KRAUSS
Published: March 12, 2007
HOUSTON, March 11 — Halliburton, the big energy services company, said on
Sunday that it would open a corporate headquarters in the United Arab
Emirates city of Dubai and move its chairman and chief executive, David J.
The company will maintain its existing corporate office here as well as its
legal incorporation in the United States, meaning that it will still be
subject to domestic laws and regulations.
Although the announcement of the new Dubai arrangement took many by
surprise, Halliburton said that the move was part of a strategy announced in
mid-2006 to concentrate its efforts in the Middle East and surrounding
areas, where state-owned oil companies represent a growing source of
Halliburton, which was led by Vice President Dick Cheney from 1995 to 2000,
is currently in the process of spinning off KBR, its military contracting
unit, to focus on its business of drilling wells and maintaining fields for
oil companies. The company did not say what implications the Dubai
development might have for its military contracts. Lea Anne McBride, a
spokeswoman for Mr. Cheney, referred questions about the company’s plans to
The Dubai announcement, which Halliburton made at a regional energy
conference in Bahrain, comes at a time when the company is being
investigated by the Justice Department and the Securities and Exchange
Commission over allegations of improper dealings in Iraq, Kuwait and
Nigeria. Halliburton has also agreed to pay billions of dollars in
settlements in asbestos litigation.
Halliburton would not elaborate on Sunday on what the shift of its top
executive might mean for some of the issues it faces. The move seemed to
raise questions about whether Halliburton might gain tax advantages or other
A Halliburton spokeswoman, Melissa Norcross, referred inquiries to the
company’s press release, saying in an e-mail message, “The C.E.O.’s job is
global by nature. He will continue to remain attentive to our shareholders,
clients and employees around the world.”
Ms. Norcross added, “As companies usually refer to the C.E.O.’s office as
the corporate headquarters, that’s what we are doing. Basing the C.E.O. in
Dubai to focus on our Eastern Hemisphere growth makes good business sense,
as it is the center of our Eastern Hemisphere operations and a global
business hub. We will maintain our company’s legal registration in the
United States and we are not leaving Houston.”
The mayor of Houston, Bill White, was notified by telephone shortly before
Halliburton made the announcement, according to a spokesman, Frank Michel.
“We don’t expect it will have a big impact on employment here,” Mr. Michel
said. “We point out that Houston continues to be the center for the
international oil and gas business.”
“Having a corporate headquarters is different than it used to be,” Mr.
Michel added. “Executives spend a lot more time on airplanes, and we
understand that.” He noted that Schlumberger, one of Halliburton’s top
competitors, maintains offices in both Paris and Houston.
On the face of it, the decision to move Mr. Lesar abroad appears to point
mainly to how the epicenters of the energy business are moving from the
mature fields of North America to the younger fields of the Middle East and
Africa. It also underscores the arrival of Dubai as a center for energy
deal-making and commerce, a role once solidly filled by Houston.
“My office will be in Dubai, and I will run our entire worldwide operations
from that office,” said Mr. Lesar, who holds the titles of chairman, chief
executive and president, at a conference in Manama, Bahrain’s capital. “The
Eastern Hemisphere is a market that is more heavily weighted toward oil
exploration and production opportunities. Growing our business here will
bring more balance to Halliburton’s overall portfolio.”
Halliburton is incorporated in Delaware and its stock is traded on the New
York Stock Exchange. Reuters reported that Mr. Lesar said Halliburton would
like to list its shares on an exchange in the Middle East, which it could do
while maintaining its listing in New York.
Halliburton reported a record $2.3 billion in profit last year and continues
to be the dominant oil-field service company in North America, where it
generates 60 percent of its operating income.
Over the last several years, an increasing amount of Halliburton’s business
has shifted to places like Kuwait, Russia, Libya, Australia, Vietnam, and
west and central Africa. And, mirroring trends in the energy business, its
customer base is shifting from traditional Western oil companies to national
oil companies in developing countries.
Some analysts who follow Halliburton said they did not think the relocation
of Mr. Lesar reflected anything more than changes in the energy business.
“They are moving to the center of the Eurasian-African hemisphere and that’s
where the bulk of the work is going to be in the future,” said Barbara
Struck, an analyst with Energy Intelligence Group, a research firm.
She said she doubted the company was trying to evade laws in the United
States. Halliburton has suffered several years of negative headlines, many
having to do with its administration of a $16 billion deal to support
American military operations in Iraq. Halliburton’s KBR subsidiary has been
the subject of a number of investigations for mishandling billions of
dollars of housing, food and fuel contracts for American troops and
government officials operating in Iraq. Halliburton began spinning off KBR
During Mr. Cheney’s tenure as chief executive, Halliburton bought a company
that saddled it with asbestos claims. The company has agreed to pay nearly
$5 billion in settlements.
Despite its recent problems, Halliburton posted record revenue, net income
and margins last year.
Perhaps the biggest winner could be Dubai itself, one of seven emirates in
the United Arab Emirates confederation, which has sought to establish itself
as a regional commercial center on par with Singapore and Hong Kong. Most
multinational companies, including Halliburton, have made Dubai a regional
hub for their Middle Eastern business over the last decade.
Hassan M. Fattah contributed reporting from Dubai, United Arab Emirates, and
Rachel Mosteller from Houston.