GENB 3302 Connecting Bauer to Business Projects

HALLIBURTON COMPANY
Business Project for Finance
Spring 2019
I. Company Description & Background

Halliburton Company is one of the world's largest providers of products and services to the energy
industry. With 60,000 employees supporting global operations in approximately 80 countries, the
company helps its customers maximize value throughout the lifecycle of the reservoir – from
locating hydrocarbons and managing geological data, to drilling and formation evaluation, well
construction and completion, and optimizing production through the life of the asset.

Halliburton comprises 13 product service lines (PSLs). The PSLs operate in two divisions:
Drilling and Evaluation, and Completion and Production. Our Consulting and Project
Management PSL works across both divisions and is the spearhead of our integrated-services
strategy. Its financial results are included in the Drilling and Evaluation Division. PSLs are
primarily responsible and accountable for strategy, technology development, process
development, people development and capital allocation. As of December 31, 2017, the two
divisions accounted for $24 billion dollars in Revenue.

The financial performance of our company and activity within our product service lines are
significantly impacted by a number of factors, including: oil and natural gas prices, global oil
supply, the world economy, the availability of credit, government regulation, and global
stability, which together drive worldwide drilling activity and customer spending.

Oil and natural gas prices have historically been volatile, particularly in the last few years, and
have been affected by global supply and demand, including the ability or willingness of the
Organization of Petroleum Exporting Countries (OPEC) to set and maintain oil production
levels. As customer budgets have tightened-up during the past few years, oil and gas service
companies are continuously challenged with providing services at the lowest cost per Barrel
of Oil Equivalent (BOE). Additionally, the North American market has experienced logistical
challenges due to underinvestment in midstream infrastructure adversely impacting drilling
activity and creating regional supply and demand imbalances.

Halliburton’s value proposition is to collaborate and engineer solutions to maximize asset

value for our customers. To be competitive, Halliburton must look broadly for technologies
that lower cost and improve production. Although technological innovation has had a
disruptive effect on the oil and gas industry, Halliburton and its competitors have merely
scratched the surface of the foreseen potential.

II. Project Question

Halliburton’s Executive Committee (EXCOM) wants to ensure that the Company is

maximizing shareholder value through the execution of its value proposition and to be the
 preferred service provider of market leading technologies for their customers. They are
particularly interested in understanding the untapped potential of emerging technologies such
as robotics automation, block-chain, machine learning and artificial intelligence.

III. Parameters / Project Scope

In the upcoming EXCOM meeting, EXCOM has asked certain Halliburton Finance &
Accounting members (your team) to present two key areas of focus to assist them in their
strategic decision-making process. In order to effectively communicate the results, the
EXCOM has asked for a technology roadmap to implement emerging technologies for both
oilfield operations as well as back end support functions.

The team should identify opportunities to use new technologies help Halliburton achieve
its goal of digital operations and functions (such as finance, HR, procurement, etc.) The
team should research technologies including:

- Robotic Process Automation

- Blockchain (including its sue for smart contracts)
- Big data analytics
- Machine Learning
- Artificial Intelligence

The first ask is for the team to research and analyze the technologies. The team should
recommend how at least one of the technologies could benefit Halliburton’s three
strategic mainstays - deep water, unconventional, or mature fields.

The second ask is that teams also identify one technology to improve a supporting
function such as Accounting, Procurement Materials & Logistics, Human Resources,
Supply Chain, Real Estate. Communications, Marketing or Legal.

Halliburton askes that each team prepare a presentation which:

- Provides an overview of the technologies noted above.

- Recommend how one technology could transform deep water, unconventional, or
mature fields.
- Recommend how one technology could transform a supporting function.
- Explain the benefits of the recommendations to Halliburton and its customers.

IV. Research topics & Resources

Your research and analysis may include, but is not limited to, a discussion of the following
items:
• Halliburton Future Technological State
o Robotic Process Automation
o Blockchain (including its sue for smart contracts)
o Big data analytics
o Machine Learning
 o Artificial Intelligence
o Specific markets (product/service lines; geographic regions) that are impacted
differently than others

• Back-end office support automation and centralization

o Centralization and automation of legacy processes

o Logistics and Supply Chain including manufacturing
o Research & Development
o Transportation services enhancements (self-driven)
o Specific strategies executed, including the pros and cons of each in the short-
term and long-term

• Global Impacts & Other Consideration

o Shifting economic landscape – “BRIC” countries
o Regulatory constraints
o Cloud-based computing
o Inherent risks of proprietary data compromise
o Adjacent industries – communications, transportation, etc.
o Benchmarking of OFS companies (i.e., Halliburton and its direct competitors)
o Analysis of other O&G sectors (upstream/midstream/downstream)

Your team should use publicly available information for various companies and market
analysis at your disposal, including the following:

FINANCIAL:
• Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed with the
U.S. Securities and Exchange Commission (www.sec.gov)
• O&G company websites
• Quarterly earnings releases (company websites and Form 8-K’s at www.sec.gov)
• Quarterly earnings call transcripts (http://www.morningstar.com/earnings)

OIL & GAS INDUSTRY:

• McKinsey & Company (https://www.mckinsey.com/)
• Robotics Business Review (https://www.roboticsbusinessreview.com/)
• Oil and Gas Technology (http://www.oilandgastechnology.net)
• U.S. Energy Information Agency (http://www.eia.gov)
• Other market publications
• Consider doing interviews or surveys of oil industry professionals you may know.

Starter Links for technology

o Robotic Process Automation

o https://en.wikipedia.org/wiki/Robotic_process_automation
o https://medium.com/@cfb_bots/the-difference-between-robotic-process-
automation-and-artificial-intelligence-4a71b4834788
o Blockchain (including its sue for smart contracts)
 o https://www.linkedin.com/pulse/blockchain-explanation-your-mum-could-
understand-jamie-skella/
o Big data analytics
o https://www.ogj.com/whitepapers/2018/04/big-data-and-analytics-applied-
to-oil-and-gas.html
o Machine Learning
o https://www.wordstream.com/blog/ws/2017/10/04/chatbots
o Artificial Intelligence
o https://iaoppulse.net/2018/06/artificial-intelligence-drives-outcomes-in-
business-processes/

Students should use any and all resources at their disposal. Resources and scope of the
project should include guidance from Halliburton project sponsors, UH resources such
as libraries and business school faculty. Interviews with businesspersons, business
journals, and internet research relevant to the project topic seeking available best
practices, white papers or other forms of thought leadership from the global business
community. Be sure to include high level of creativity and innovation when presenting
and recommending solutions.

V. Desired Outcome / Deliverable Format

• Team PowerPoint presentation

• Detailed written report including source citations

The team should prepare a 45-60 minute presentation to share team’s recommendations with
the Sponsors and allow additional 20-30 minutes for questions. High-level recommendations
should be organized and arranged in logical format, and each recommendation supported by
clear reasoning and justification. Hard copies of both presentation and report should be
brought to the final meeting. The team should provide an electronic copy of the presentation
and reports.

The Company Sponsors will likely invite representatives from other company departments to
attend the final presentation.
VI. Communication / Logistics

The team should schedule an on-site meeting at Halliburton offices (3000 N Sam Houston
Pkwy E, Plaza 2, Houston, TX 77032) with project sponsors as quickly as possible after
teams are formed and charters developed. A second meeting is to be arranged by the team
with project sponsors in the middle of the semester to perform an assessment and process
check on the project direction and preliminary recommendations. The team should not be
surprised to find themselves partially to significantly off course, thus this second meeting is
key. The final presentation should be scheduled as far in advance as possible and will take
place at the Halliburton offices. All UH Bauer team members must attend every meeting
scheduled with the Project Sponsors.

Company points of contact are listed below and can be reached by either email or phone.