The headlines haven't been particularly kind to Halliburton Co. recently. But flip back to the stock tables and you'll get a whole different story.
The world's second-largest oil services company, Hallliburton was the No. 6 performer on the S&P 500 last year, and its shares this year have risen 24% on the New York Stock Exchange, closing Friday at $23.87, not far from its 52-week high of $24.67.
The strong performance has come in spite of the revelation that Halliburton paid a multimillion-dollar bribe to a Nigerian official and the controversy surrounding the company's no-bid secret contract to extinguish oil well fires in Iraq. What's more, Halliburton is under investigation by the Securities and Exchange Commission, which in December started a probe of some of the company's accounting practices in the late 1990s. Just Friday, Halliburton agreed to pay $6 million to settle 20 shareholder lawsuits that accused it of using deceptive accounting practices back then.
The Iraq contract has drawn the most bad press. Critics have been vocal about the link they see between the lucrative, hush-hush deal and the fact that Houston-based Halliburton was headed by Vice President Dick Cheney before he resigned in August 2000 to become George W. Bush's running mate.
Army Corps of Engineers officials acknowledged last month that they had downplayed the scope of the contract and that what was billed as an emergency pact to put out anticipated fires in wartime was in fact an assignment to kick-start Iraq's oil industry. And that disclosure came on the heels of an admission that the contract's value could go as high as $7 billion, outraging members of Congress and others who said the Army misled the public into thinking the amount would be in the mere millions.
But Wall Street simply isn't troubled: Halliburton shares have gone up 15% since the contract became public March 24.
"Halliburton is a big, diverse company," said Bill Miller, a political consultant and lobbyist in Austin, Texas. "It takes more than one storm for them to get wet.
"You have to take threats seriously when you're a publicly traded company and the government's looking into you. But the company's doing a good job of explaining their position to shareholders."
The company was founded by Erle Palmer Halliburton, a young ex-Navy man with an attitude, the kind that got him fired in 1919 from his first job at a California cement company. Determined to do things his way, he pawned his wife's wedding band, headed to Oklahoma and set up his own cement mixing firm.
By 1922, Halliburton had a U.S. patent for his "jet-cement" mixer, and his 17 trucks were rumbling across the muddy oil fields of four neighboring states, sealing up leaky oil pipelines. Getting to those jobs was so harrowing that his drivers invented the firm's first slogan: "We will get there, somehow ... safely."
They got there and then some. With 85,000 employees in more than 100 countries, Halliburton's oil drilling, engineering and other operations are expected to pull in more than $13 billion in revenue this year.
Halliburton aims to be one-stop shopping for the expensive and complex process of finding, extracting and transporting crude oil. Among its many units are entities that conduct exploration, erect offshore oil and gas facilities, rent out massive drill bits and clean pipelines.
Major oil and gas companies, such as Exxon Mobil Corp. and ChevronTexaco Corp., used to have labs that did research, but the majors' belt-tightening in recent years means oil-patch technology has fallen to companies such as Halliburton and its larger rival, Paris-based Schlumberger Oilfield Services, and smaller competitors Baker Hughes Inc. and Weatherford International Ltd.
It's a global business, and usually profitable: Analysts predict that Halliburton's earnings this year will hit $1.05 to $1.10 a share, up from 89 cents last year.Halliburton's success is maddening for critics such as Rep. Henry Waxman (D-Los Angeles). He says Halliburton and its large subsidiary, Kellogg Brown & Root, have a history of getting special treatment from the Pentagon.
"It's amazing to me that with all the audits they've undergone that have recorded a history of overcharging the government, Halliburton and its subsidiaries still get picked for very lucrative contracts," he said.
A September 2000 report from the General Accounting Office, for instance, took issue with KBR's $2.2-billion contract to provide logistical and engineering support in the Balkans, saying the Army should be more vigilant about reviewing costs submitted by KBR. In February 2002, KBR paid $2 million to the government, but admitted no wrongdoing, to settle claims that it improperly billed Uncle Sam for work it did at what formerly was Ft. Ord near Monterey.
Last July, less than six months after KBR settled the Ft. Ord case, the Pentagon awarded KBR a $9.7-million contract to build 204 prison cells at Guantanamo Bay for suspected Al Qaeda members.