Analysis of Halliburton Company's Politics in Oil & Gas Management

This report provides an analysis of Halliburton Company's 2016 integrated report, focusing on its strategies in the oil and gas industry. It examines corporate governance, reputation management, and corporate social responsibility (CSR) initiatives, as well as boardroom organization and management. The report delves into the company's efforts to maximize gains and value, considering factors such as market changes, financial performance, and technological advancements. It also discusses the impact of external factors like political risks and economic conditions. Furthermore, the report assesses Halliburton's performance, its adaptation to market changes, and its efforts to maintain high standards. The report provides a comprehensive overview of Halliburton's operations and strategic responses to industry challenges, including an evaluation of its financial performance and its ability to adapt to changing market conditions. The report also includes an analysis of external factors affecting the company, and provides recommendations.

Running Head: POLITICS IN THE MANAGEMENT OF OIL & GAS
POLITICS IN THE MANAGEMENT OF OIL & GAS
Name of the Student
Name of the University
Author Note

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ExecutiveSummary
This paper aims to study the integrated report of Halliburton Company, a leading oil and gas
company in the United States, produced in the year 2016. The report studies the measures
taken by the company and its subsidiaries besides the Corporate Governance, Reputation
Management, Corporate Social Responsibility (CSR) and Boardroom Organization and
Management strategies undertaken by the company during this time span. The study deals
with the situations of maximizing the gains and value for the company in through the
adoption of these strategies. Further the paper concludes with the analysis. Besides this, the
study also looks into the various articles, news and peer-reviews that illuminates and
criticizes the approaches by the company with relevant recommendations for the same.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Corporate Governance:..........................................................................................................7
Assessment of the organization’s management:................................................................7
Influence on hierarchies:....................................................................................................7
Board decision-making:.....................................................................................................8
Reputation Management:.......................................................................................................8
Reputation management inside the industry:.....................................................................8
Reputation management outside the industry:...................................................................9
Corporate Social Responsibility (CSR):................................................................................9
Reputation management initiatives:.................................................................................10
Boardroom Organization and Management:........................................................................11
Various approaches used by Halliburton in boardroom decision-making:......................11
Conclusion................................................................................................................................12
References................................................................................................................................14

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Introduction
Pure play is a term popularly used by the investors for a publicly traded company; this
term is usually used for the companies that direct its resources on only a single line of
business (Singh and Hess 2017). Many of the electronic retailers are pure play as they only
focus on selling one type of goods through the medium of the internet (Bharadwajet al.
2013). Hence if there is a slight decline in the interest of the product the company is
negatively affected. There is a significant difference between the stocks of the companies that
indulge in diverse lines of business and the pure play companies. For the investors of the
companies that have a more than one type of business, they have to take on multiple risks in
industries in which they do not want to invest (Catlin, Scanlan and Willmott2015). Hence,
investors are more interested in pure play companies because the flow of cash is easy to trace.
The numbers of pure play companies are rare. ‘Coca-cola’ will also be considered as a pure
play company in the beverage industry, compared to this the company Pepsi would not be
considered as a pure play company as it has its products in the food industry as well. This
report will deal with the company of Halliburton. Halliburton is a multinational company
based out of America, it is considered to be one of the largest oil field service companies
(Grant 2013). The company has double headquarters in Dubai and Houston. Halliburton
operates in more than 70 countries. The company owns more than hundred subsidiaries,
branches, brands, affiliates and divisions worldwide. It is one of the pure-play companies that
mostly provides diesel fuel, liquefied petroleum gas (LPG) and gasoline at its gas stations.
Discussion
The year, 2016, was a turbulent year in the gas and oil industry. The market share of
Halliburton increased because they collaborated with the customers, adapted to the changes
in the market and lastly by maintain the high quality that is expected of Halliburton. In the

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North American region, the oil and gas industry went through some major changes. There
was almost an 80 percent decline in the land rig count in the United States of America
(ir.halliburton.com 2016). During this phase when the industry was going through some
major problems, Halliburton managed to get some significant market share. As a
consequence of this, the company was able to derive its high profit during the down run and
in the fourth quarter the company had restored its position as the one of top companies in the
world. The engineering techniques at Halliburton helped them maximize their asset value.
The company has operations in more than 70 countries, Halliburton’s services,
execution, technology provided a strong platform for the growth of the all the subsidiaries
and affiliates across the world. The international market presence of Halliburton is driven by
two segments, mature fields and deep water. A magnitude of 70 percent of the global oil
production is dependent on mature fields; this also serves as an important element of the
international operations of Halliburton (www.annualreports.com 2016).
The Company earned a revenue of $15.9 billion in the year 2016, which was
significantly low compared to its previous years where it earned a revenue share of $32.9 and
$23.6 billion in the year 2014 and 2015 respectively (Annualreports.com 2019). However, the
capital expenditures were considerably low at $0.8 billion in 2016 as compared to the
previous years where it was $3.3 billion and $2.2 billion in the years 2014 and 2015
respectively (Annualreports.com 2019). Dividends to the shareholders also increased from
$533 million in the year 2014 to $614 million in 2015 and $620 million in 2016
(Annualreports.com 2019). The Company boldly accepts its poor financial state and
announces to make use of its existing resources, assets and lower the structural costs to
‘recover’ itself. However, it boasts to serve its customers and retain its shareholders even in
such a scenario.

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The Company continues to believe in the same policies to deliver goods to its
customers at a reasonable rate and serve across the globe and majorly in the North American
basin. The various factors that affected the Company’s decline in the revenue was—
 An unprecedented decline in rig count;
 Investments in the fields of technological developments and research and
development;
 Product pricing;
 Service Delivery;
 Health, Safety and Environment Standards;
 Service Quality;
 Global Talent Retention;
 Product quality and warranty;
 ;Understanding the geological characteristics of the hydrocarbon reservoirs, and
 Technical Proficiency and Working Capital;
 Economic and Financial conditions across countries;
 Political risks in certain countries, leading to delays, renegotiation and expropriation
of the contract terms with government entities or other business organizations; and
 Variations in business conditions including factors like — .customers, shareholders,
raw materials, employees, environment regulations, research and development costs,
patents, hydraulic fracturing process (Annualreports.com 2019).
Halliburton’s technology according to the 2016 annual report is reliable, simple and
cost-effective. The company has 15 technology centers all around the world
(Annualreports.com 2019). On a cost per patent basis – a significant gauge of research and
development efficiency is that is parallel with any industry sector business. The products of

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Halliburton as mentioned are sold across the world, the competitive factors that affect the
sales of this company are:
 Price
 Service delivery
 Health, safety and environmental standards and practices
 Service quality
 Global talent retention
 Understanding the geological standards of the hydrocarbon reservoir
 Product quality
 Warranty
 Technical proficiency
 The factors that affect the prices of oil and natural gas are:
 The supply and demand of the oil and natural gas
 Government regulations, including the policies that are formulated by the government
regarding the exploration and development of oil and natural gas reserves.
 Weather conditions and natural disasters.
 The political, economic conditions of the world.
 The willingness of the Organization of Petroleum Exporting Countries (OPEC) to set
and maintain oil production levels.
 The level of oil produced by the non-OPEC countries.
 Oil refining capacity and shifts in end customer preferences toward fuel efficiency
and the use of natural gas
 The cost of producing and delivering oil and natural gas.
 Potential acceleration of the development of alternative fuels.

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The liabilities that arose from the Macondo explosion after a semisubmersible oil drilling rig,
named, Deepwater Horizon, sank on 22April, 2010 added to a huge pressure on the
Company (Annualreports.com 2019).
Corporate Governance:
The collection of different mechanisms, relations besides the processes that the
company undertakes for its own control and operation is called corporate governance.
Assessment of the organization’s management:
 Provision of supplying oil at lower cost per barrel.
 Making the most of the resources and assets available in order to attain efficiency and
gains with technological advancement.
 A distinctive and strong product-manufacturingbase, which offers potential for growth
in specific markets.
 An investment into a sector which is selective when observed from positions of
growth besides application of distinctive technology as well as operates performances
in order to elongate the productive life of the assets involved, which thereby,
enhances the company’s profitability.
 In this pure play or integrated gas generation, worldwide coverage ofthe same besides
holding a position of leadership in a growing and profitable market structure.
Influence on hierarchies:
The Corporate wing of the company covers the non-operating activities. It consists of
the treasury organizations and holdings like its activities of self-insurance besides its central
functions and headquarters. The extensive focus of the Company on the policies aimed at
technological advancement besides abiding by the environment policies plays a crucial role in
this particular report, given the condition of the company.

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Board decision-making:
The Nomination and Succession Committee continued to work very hard during 2016
with succession planning as its highest priority with a thorough benchmarking and search
exercise in the list of both external as well as internal candidates. In accordance to the New
York Stock Exchange (NYSE) rules, applicable for the foreign private issuers, the Company
follows the home-country based practice when it comes to corporate governance. It also looks
into regulations set forth by the American government to reduce vehicular pollution
(Elgowainyet al. 2016).
The Governance Structure of the company is discrete and elaborative with specific
divisions managing each aspect uniquely and not only identifying the problems, if any, but
also recommending a set of solutions. If need be, a new team is also created to target the
given problem and resolve it, accordingly. The Learning Output (LO1) of the governance
structure is very high, given the extensive division of teams to intensify actions and deal with
forthcoming challenges and adapt to the situations accordingly, ensuring a sustainability in
the market structure.
Reputation Management:
Reputation management inside the industry:
The company maintains a huge global portfolio in terms of its business across an
entirely integrated chain of oil and oil products. It is in the business for almost a century and
that creates a huge market value with respect to trust. They are exposed to oil products,
natural gas, crude oil and chemicals. This diversified company portfolio allows the company
to mitigate the effect of volatility in price of any of the above-mentioned products.

9POLITICS IN THE MANAGEMENT OF OIL & GAS
Reputation management outside the industry:
Halliburton, being a significant company in the business of oil and gaseous fuel
products, provides a vast market for economic activity. The market growth of Halliburton
(HAL) dropped by a huge amount in the year 2016(Halliburton 2019). However, it was in the
second quarter when the Company realized and started boosting itself up again.
The advantages of an integrated pure-play company like the Halliburtonis its focus on
a single line of production, though saturated but streamlined production processes and
supply-chains. It has diversified bi-products which are of high value, excluding crude oil and
gaseous products. However, other pure-play companies, say Coca-Cola, which is the leading
giant in the in the beverage industry, considering soft drinks, does not have much diversified
products or bi-products to add to its profit margin other than the line of aerated drinks. This
can be considered as another Learning Output (LO2)from the given type of industry.
Corporate Social Responsibility (CSR):
The company takes social responsibilities to meet the various environmental as well
as social challenges to operate effectively. If the activities of the company adversely affects
the neighboring communities besides the society, the company may lose its business
opportunities; incur liabilities and/or sanctions besides losing their license to function or
resulting in a situation where holding the license gets impacted over (Mittal and Groening,
2016). The Company has its own business principles where it aims to carry out the
responsibilities imparted to the customers, employees, shareholders, business partners and
society with a standard set for each of them, guiding the method of business conduction with
integrity and a strong sense of respect for communities, people and environment (Onuoha
2016).

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Reputation management initiatives:
 The Halliburton Oil Company attempts to minimize its cost of manual labor
and invest on technological developments besides skilled labor.
 The oil company was producing a wide band of products so in order to sustain
and keep the existing customers besides the trusted market shareholders, the
Company maintained its prices at lower levels despite its inability to earn
sufficient revenue.
 Use of hydraulic fracturing (Konschnik and Dayalu 2016).
 The Halliburton Oil Company is making efforts to grow its Research and
Development so as to easily discover the rigs based on hydrocarbon
availability.
 The Company continuously tries to prove its brand value and market
positioning, repeating trust and association of relationships with an assurance
of recovery.
The structure of pure-play also exercises the structure of power play in the business of
oil and natural gas, considered one of the most profitable line of businesses. The exemplar
proactive measures includes the advanced technological changes that the Company has
undertaken, based on its 2016 integrated annual report. The decisions to attain a sustainable
environment with affordable products is what the Company aims at in this report, especially
after the Macondo case (Pranesh, 2017). Lack of dynamic leadership skills and human
failure contribution analysis to manage risk in deep water horizon oil platform. Safety
science, 92, pp.85-93.. The reactive measures used by the Company, however, remains
hidden and goes unmentioned in the report. The massive environmental damage and human-
life threatening activities that majorly relatesto the oil spill in the regions around these oil
mining plants and refineries are reactive measure, sometimes used by the company for

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commercial gains while on other times, they remain asresults of accidents. The process of
digging until the search for oil reserves, deep underground are met leads to situations where,
at times, reserves are not found. The landscape gets destroyed and the place is deserted but it
never returns to its authentic form. This is a third factor in the list of Learning Outputs
(LO3). However, the Company is also looking at harnessing solar energy in order to derive
energy (Hossain 2016).
Boardroom Organization and Management:
Halliburton Oil Company significantly works in an efficient way when it comes to
meeting its directors, head of managements and the shareholders. They provide the best
assurance they can sell to convince a better performance through trust and loyalty.
Various approaches used by Halliburton in boardroom decision-
making:
 The Company has a strong market positioning and brand value that one cannot
ignore.
 A method of selective optical fiber sensor system (Maidaet al. 2016).
 It is one of the giants and leader in this kind of oligopolistic business of oil and
natural gas, dictating prices and managing the market.
 It has taken sustainable measures to carefully look at the disasters and take
ample measures to prohibit such incidents like Macondo that requires not only
loss of an asset but also a huge cost in the cleaning up process besides losing
so many lives.
The year of 2016 (Halliburton 2019) witnessed an external evaluation conducted by the
Boardroom, which discussed the major challenges at bay for the Company that it needs to
overcome. The three major areas of concern in this report were Strengths, Challenges and