The century that shaped one of Houston’s most iconic companies
From a wagon and mules to multimilliondollar projects, Halliburton has stood the test of time — and is paving the way for the industry’s future
A borrowed wagon. An old pump. A salvaged tank. Clothesline. Wooden plugs. And two mules.
That’s what Erle Palmer Halliburton had when he started his oil well cementing business in the small Texas town of Burkburnett in 1919. He also had his wife’s wedding ring, which he pawned for seed money.
Flash forward 100 years, and Halliburton is hailed as an American success story. Today, his company uses some of the most advanced technology known to man and has become one of the largest oil field service companies in the world — employing more 60,000 people in more than 80 nations. It also has developed much of the advanced drilling technology that yielded a shale revolution in U.S. oil fields, advancing a national goal of energy independence.
“We will cover all phases of oil well cementing service, equipment and accessories,” Halliburton once declared. “We will maintain an adequate and sustained program of research rendering effective oil well cementing services throughout the United States. We shall give a uniform quality of service regardless of location.”
Halliburton said that in a 1954 film and today the company he founded continues to operate under those same principles. Halliburton’s current CEO Jeff Miller, reflecting on the company’s centennial, described its employees as adaptable, fearless and competitive — qualities that have not changed in his 22 years with the company.
“It’s hard to prognosticate what we’ll do for the next 100 years,” Miller said, “but what I do know with certainty is that same spirit is alive and well at Halliburton today and it is in fine form.”
The company’s headquarters has moved several times over the past 100 years, but it has been in Houston for more than 15 years. Adept at surviving the boom and bust cycles of the oil and natural gas industry, Halliburton has a long history of inventing technology and processes that lower oilfield costs and boost production.
During the peak of the shale revolution and hydraulic fracturing boom in 2014, the company posted a record $3.5 billion profit on nearly $32.9 billion of revenue. Like other service companies, though, it suffered in a crude oil price downturn that dragged the industry through 2017 — but it closed 2018 with a $1.66 billion profit on nearly $24 billion of revenue.
Humble beginnings
Born in Henning, Tenn., and raised on a nearby farm, Erle Halliburton began working at the age of 12 when his father died. It was up to him to support his mother, sister and four brothers.
Halliburton joined the U.S. Navy in after his 18th birthday in 1910, becoming a shipboard engineer.
After his military service, he headed to the oil fields of California, where he worked for the Perkins Oil Well Cementing Co. in 1915. A disagreement with his boss Almond Perkins ended with Halliburton getting fired about a year later, but the resolute 19-year-old turned that into a business opportunity.
“The two best things that ever happened to me were being hired, and fired by the Perkins Oil Well Cementing Co.,” Halli-
burton was often quoted as saying.
A company of his own
After a few years of perfecting his ideas for cementing oil wells, Halliburton and his fiance Vida Taber Halliburton moved to Burkburnett, where he started an oil field cementing business named the New Method Oil Well Cementing Co.
In 1920, Halliburton, his wife and their two children moved to Wilson, Okla., where he renamed the company the Halliburton Oil Well Cementing Co., or HOWCO. Living in a one-room house behind their business, Taber agreed to pawn her engagement ring to pay for equipment and supplies.
The couple eventually got the ring back and the company got its first big break working for the Skelly Oil Co. in the oil fields of Oklahoma.
Back then, a typical oil field crew could mix 500 sacks of cement per day but it was slow, hard work and the quality was not consistent. Inventing a basic process still used to this day, Halliburton used a large funnel known as a hopper, a hose and a jet of water that would suck the cement mix in an instant and quickly produce cement with consistent quality.
“There was no such thing as the good old days,” the Oklahoma Hall of Fame quoted Halliburton as saying. “They were filled with back-breaking labor that aged people before their time. Thank God that American inventiveness has given us the marvelous machines with which we now play and work.”
Three decades of milestones
By March 1921, Halliburton had his first patent for a “method and means of excluding water from oil wells.” About a year later, the company was prospering from the Mexia oil boom in Texas and cemented its 500th well that summer.
Halliburton Oil Well Cementing Co. incorporated in 1924 with Halliburton, his wife and seven oil companies as its stockholders. The next 25 years marked a series of milestones, including the company’s first international customers and offshore projects. Shares of Halliburton began trading on the New York Stock Exchange in 1948.
Halliburton performed its first commercial hydraulic fracturing job on an oil well about 12 miles east of Duncan, Okla., in 1949 - a process deployed way before its time.
By 1952, the company’s revenues topped $100 million for the first time. By the mid-1950s, the company has created a strong corporate culture of hard work, research and innovation to improve the performance for its oilfield customers.
“The executives that direct and control operations of the company have without exception come up through the ranks,” the narrator for the 1954 film declared. “They are practical men with years of experience in every type of operation in which Halliburton is active.”
Halliburton died in 1957 and was posthumously inducted into the Oklahoma Hall of Fame one later. Former Oklahoma State Gov. Johnston Murray once described Halliburton as “an example of what a determined man can do under the great free enterprise system in this country.”
“Erle P. Haliburton’s inventions, ideas, and enterprises helped change lives for the better,” said Oklahoma Hall of Fame CEO Shannon Rich. “He is one of Oklahoma’s all-time leading industrialists. Ever expanding his influence across the globe, Halliburton’s impact on the infrastructure of the global economy remains a legacy … with which few individuals can compare.”
Leaders in technology
As a company, Halliburton continued to change with the times and eagerly embraced the use of computers, sensors and broadcasting equipment in the 1950s and 1960s.
Since its inception, it has been granted more than 37,000 patents around the world for its technology and services. Patent numbers are proudly displayed on the wall of its research at the company’s research and technology center at its headquarters
and campus off the Sam Houston Beltway in far north Houston.
Carlos Torres-Verdin, a petroleum engineer professor with the University of Texas at Austin, described Halliburton as a technically aggressive company that successfully competes with companies that have larger research and development budgets.
In the 1950s, French-owned oilfield company Schlumberger pioneered logging, which entails sending sensors down an oil well to get readings about geological formations and the hydrocarbons that they contain. Halliburton bought Fort Worth electronic testing and logging service company Welex in 1957. With the company performing high-class engineering work with relatively low research budgets, TorresVerdin said it did not take long for Halliburton to rival Schlumberger in that field.
“Halliburton provided muchneeded competition to Schlumberger and Baker-Hughes,” Torres-Verdin said. “As a whole, the oil industry has benefited from that competition through better, prompter, more diverse, and more sophisticated technical solutions to approach the rapidly changing landscape of engineering challenges"
Although renewables are making inroads into electricity generation, Miller said oil and gas remains abundant, affordable, portable and dense. Oil and gas, he said, will still be needed to maintain modern standards of life and the company will be there to support exploration and production activities.
“If you care about people, you have to care about oil and gas, because nothing has done more and nothing does more Today to lengthen life expectancy and reduce infant mortality,” Miller said. “It’s how we manage so many things in everyday life that create quality of human life.”
Controversies
Halliburton’s 100 years of history are not without blemishes, though.
The company and three of its subsidiaries were involved in a
series of scandals between the early 1990s through 2014.
A December 1962 decision to buy engineering, procurement and construction company Brown & Root came back to haunt Halliburton in the 1990s. Later renamed KBR, the Halliburton subsidiary became involved in controversial contracts with the Department of Defense in the Middle East following the 1990 Gulf War and the 2003 U.S. invasion of Iraq.
The U.S. Department of Justice fined Halliburton $1.2 million in July 1995 after one of the company’s subsidiaries exported technology and services to Libya, which was facing sanctions at the time.
Dick Cheney, who had served as secretary of defense during the first Gulf War, became Halliburton’s CEO in October 1995.
Cheney set up a Feb. 1998 merger valued at $7.7 billion with rival Dresser Industries. He left the company in July 2000 to become the vice presidential running mate for then-candidate George W. Bush.
His merger with Dresser Industries ended up costing Halliburton $4 billion when it resulted in a December 2002 settlement for an asbestos class action lawsuit. Dresser Industries and KBR filed for Chapter 11 bankruptcy in Dec. 2003.
Halliburton and KBR parted ways in April 2007 in a move that tamped down criticism of a potential conflict of interest between Vice President Cheney and the lucrative no-bid contracts KBR received in the second Gulf War.
Then came Deepwater Horizon oil spill in April 2010. Halliburton was involved, and in 2014 it entered into a $1.1 billion settlement for its role in the environmental disaster.
Shale revolution
The rise of horizontal drilling and hydraulic fracturing helped Halliburton reverse some of losses it suffered from fines and settlements. The company pioneered hydraulic fracturing technology and techniques in 1949, but when paired with horizontal drilling targeting shale geological formations, it sparked a “shale revolution” that started in Texas and was in full swing in several regions across the United States by 2010.
Environmentalists decried horizontal drilling and hydraulic fracturing amid water contamination and pollution concerns but Halliburton has always maintained that the techniques and technology are safe. The shale revolution brought big profits to Halliburton. But a sharp oil crash took the wind out of the sails of the shale revolution in Aug. 2014 and kicked off a twoand-a-half year industry downturn. Facing layoffs and losses, Halliburton announced a $7.4 billion merger with rival Baker Hughes in Nov. 2014. The merger deal fell apart in May 2016 but both companies have since returned to profitability.
Despite the price crash, horizontal drilling and hydraulic fracturing has made the United States the top producer of crude oil and natural gas in the world. U.S. crude oil production has grown from 4.8 million barrels per day in Oct. 2008 to 11.9 million barrels per day in February.
To soften the boom and bust cycle of the U.S. oil business, Halliburton has diversified its services and now receives 40 percent of its revenue from overseas, Tudor, Pickering, Holt & Co analyst Byron Pope said.
“Historically, Halliburton was viewed as a pressure pumping company but if you look at the company now, about 33 percent of its business comes from drilling and evaluations,” Pope said. “The company is doing a good job of diversifying its business.”
Houston headquarters
Although Halliburton’s first corporate headquarters was in Duncan, Okla., the company moved to Dallas in 1961. Halliburton remained in the Big D for more than four decades but it moved to downtown Houston in July 2003. Growth from the hydraulic fracturing boom, however, soon meant that the company needed more elbow room.
Halliburton moved to its current home, a 120-acre campus off the Sam Houston Beltway near the George Bush Intercontinental Airport, in 2012. In addition to housing administration buildings and the company’s largest technology center, the tree-lined campus includes amenities such as walking trails, a cafeteria, a fitness center, training rooms, an auditorium, a conference center, day care services, a car washing service and convenience stores.
As one of Houston’s largest employers, the campus has several buildings with offices and labs that employ more than 2,000 people. Miller the compa-
ny made a large investment in its current headquarters and plans to stay there for the foreseeable future.
“Oil and gas is a global business and we’re a global organization,” Miller said. “We’re very grateful for being in Houston. If you look at this campus, clearly we’re very committed to Houston – this campus, our workforce, our relationship with city and it is the energy capital of the world.”
Laying the foundation
Halliburton has a long history of its executives climbing through the ranks from the oilfields to the board room. With a mandatory retirement age of 65, the company’s succession and management development strategy provides continuing education opportunities and advancement within the organization.
Miller is no exception. He started with the company in the in 1997 and took assignments in Venezuela, Angola and Indonesia before landing higher executive roles back home in the United States. The same is true for executives Mark Richard and Lance Loeffler, who climbed through the ranks to earn spots on the company’s executive management team.
Richard started with the company in 1984 and has named western hemisphere president in January. Loeffler had a career in the investment banking world and started with the company in 2014. He held two vice president positions before being named chief financial officer in November.
Miller calls it working with a “fantastic and deep bench.”
“It’s a lot like being a basketball coach more than anything else,” Miller said about his work as CEO. “A lot of time and effort goes into it. A big part of having a high-performing organization is having high-performing people that are aligned with our vision of the future – the embodiment of our DNA to bring the next generation along.”
Next 100 years
Over the next 10 months, Halliburton is planning a series of celebrations for its centennial at its locations around the world. Details have not been the released but the company is planning events in Houston, too.
Front and center of almost every major oil and gas play around the world over the last 100 years, the company has to overcome some near-term challenges before moving on the next chapter.
Like other service companies, Halliburton is dealing with a fourth quarter drop in oil prices that resulted in a drop in demand for hydraulic fracturing and other related services. Miller believes that pipelines coming into service in the Permian Basin of West Texas later this will bring that demand back up.
James Wicklund, an analyst with Credit Suisse, believes that the company will be able to shrug it off.
“The stock price is challenged near-term with the decline in oil prices and they do have a little more debt than they would like, but they are still throwing off cash, their debt is trading at par or above and while they might not flourish at $50 oil, there is no question they will survive,” Wicklund said. “Lasting another 100 years will require them to continue on the technology track."
Looking even further ahead, Miller said technology will be key to keeping the company’s leadership role in the next 100 years. The company, he said, is always on the lookout for acquisition targets that augment its existing products and services.
Since the advent of the hydraulic fracturing boom, the oil and gas industry has come under greater pressure to control emissions. Miller said the company is committed to do so.
“We do a lot around that from the equipment that we build, the chemicals that we manufacture and the chemicals that we consume,” Miller said. “Clearly, we’re on that path toward better stewardship of the environment. The businesses that we’re in support oil and gas. We’ll work for our customers and support them in better wells and more efficient wells.”