2004 Press Releases

FOR IMMEDIATE RELEASE: January 25, 2004

October 21, 2003

To: the Managers of the New York City Police Pension Fund and the New York City Fire Pension Fund.

Re: Halliburton Business in Iran - Global Overview

Preface

This report is being submitted to the Halliburton Company Board of Directors pursuant to an agreement worked out with Mr. William Thompson Jr.'s Office of the Comptroller, which represents the New York City Police Pension Fund and the New York City Fire Department Pension Fund which are Halliburton stockholders. (approximately 318,540 shares.) The Fund's stated concern was that the Halliburton Board of Directors have actual knowledge of operations conducted in Iran or for Iranian entities by the various worldwide elements of the Company.

As the Board is aware, Iran is the subject of special sanctions administered by the U.S. Treasury, through the U.S. Office of Foreign Assets Control. In general, all "U.S. Persons", both corporate and individual, are prohibited to enter into transactions with Iran or entities working on behalf of Iran, and are further prohibited to "approve or facilitate" transactions by foreign persons. The sanctions leave open, however, the possibility for "independent foreign subsidiaries" of U.S. corporations, which are not considered to be "U.S. Persons" to conduct such business. Many U.S. corporations have foreign subsidiaries active in Iran, including our major competitors.

Halliburton has taken care to isolate its entities that continue to work in Iran from contact with U.S. citizens or managers of U.S. companies, so as to insure that all work in Iran is undertaken independently, without any facilitation, authorization or approval from U.S. citizen managers. The Board should be assured however, that the U.S. Sanctions do not prohibit them as individuals, or as the Halliburton Company Board of Directors, from having knowledge of the activity there.

All of the activities described below have been intensively reviewed by the Law Department for the purpose of determining compliance. The activities are fully compliant with applicable requirements of United States sanctions.

For simplicity of understanding, the report is presented in the format of a discussion of the separate activities of each of the foreign subsidiaries involved in Iran. For the most part, the activities of the different companies are quite independent of one another, and there is no coordinated direction of the activity.

Halliburton Products & Services Limited

Principal activity in Iran occurs through the operations of Halliburton Products & Services, Limited, a Cayman Islands company, headquartered in Dubai, U.A.E. (hereinafter HPSL). HPSL performs between $30 and $40 million annually in oilfield service work in Iran, consisting of cementing, completions work, downhole tools and well testing, stimulation services, PDC drilling bits, coring bits, fluids logging and the provision of drilling fluids.

More specifically, revenues for the separate Product Service Lines operated within HPSL are shown in this chart for the completed year 2002 and as projected for 2003.

HPSL Business	2002 $ (000's)	2003 $ (000's)
Completion Products & Services	7,722	10,274
Tools & Testing	3,346	4,197
Production Enhancement	4,763	4,029

Sperry-Sun Drilling Services	1,060	946
Security DBS Drill Bits	2,659	1,690

Baroid Drilling Fluids	4,383	5,989
Zonal Isolation (Cementing)	5,190	8,275

Bundled Services	142	3,665
TOTALS	29,264	39,065

The operation is profitable, and as shown in the chart, revenues are increasing generally across the board.

Customers in Iran include local and international oil companies. All of HPSL's customers are sound financially, and there is very little risk of non-payment so long as the work is performed correctly.

The wells themselves on which HPSL performs services in Iran are all of moderate depths and pressures, and do not present any unique technical challenge. Environmental conditions in the Persian Gulf and onshore Iran present little risk. Consequently, there is very little risk of technical failure connected with the operations there.

HPSL's activities are parallel to, and competitive with the activities of the foreign affiliates of Schlumberger, Baker-Hughes, Smith International; Weatherford; ABB Vetco Gray, FMC, Cooper-Cameron; as well as those of other U.S. and foreign competitors.

The business represents 100 % of the revenues of HPSL.

Halliburton Manufacturing & Services Limited

Halliburton Manufacturing and Services Limited, a U.K. corporation, headquartered in Aberdeen, Scotland, with manufacturing facilities in Arbroath, Scotland, produces (and or procures ) a small array of products to support Halliburton Product & Services Limited operations in Iran. Those products manufactured include cementing tools ( floats, shoes and guides - all items which are inserted into the well bore in connection with cementing of the well) and completion products (Packers / Travel joints / Landing nipples / Flow couplings / Crossovers / Pup joints / Lock mandrels / Ratch latches / Specialized flow control components / Couplings / Wire line retrievable safety valves and actuators - all products used to complete the well and regulate the flow of oil or gas during the production phase ). The chemicals for Baroid drilling fluids are various additives and basic drilling fluids; these are purchased from several European and other non-U.S. suppliers.

HMSL Business for Iran	2002 $ (000's)	2003 $ (000's)
Completion Products & Services	2,686	5,168
Baroid Drilling Fluids	53	718
Cementing Tools	909	327
TOTALS	3,648	6,213

The only sales of these products for Iran by HMSL are to Halliburton Products and Services Limited in Dubai. The figures above are thus essentially duplicated in the revenues of Halliburton Products & Services Limited shown above. Given that these sales are to a sister Halliburton affiliate there is no financial risk of non-payment.

All of these products have been manufactured by HMSL since well before the imposition of Iranian sanctions by the U.S. in 1995. The products represent quite standard technology, and there is little technical risk.

The business represents only about 1% of the revenues of HMSL.

MWKL

M.W. Kellogg Limited (hereinafter MWKL), a U.K. corporation headquartered in London, England, is a 55 - 45 joint venture company between KBR and JGC Corporation. MWKL performs occasional engineering work for energy installations in Iran, typically related to oil and gas processing and petrochemical plants.

MWKL is currently a subcontractor to an international company to provide engineering services and the license of ammonia technology for the implementation of an ammonia plant in Iran. The total contract value is about $5.4 million, of which about $4.4 million was billed in 2002. Only $28 thousand was billed in 2003. The remaining $1 million, is expected to be billed in 2004. Collections to date more than cover the cost of the work billed, and thus there is no financial risk. The technology is well understood, and MWKL does not see any significant technical risk.

MWKL has worked as a subcontractor to an international company for the front end design of plants for the conversion of natural gas to liquid fuels for another international company, the first two of which were expected to be built in Iran and Qatar. For basic design package work on the Iranian portion approximately $7.4 million was billed by MWKL in 2002 and about $3.9 million in 2003. No further work is expected in 2003 or 2004. Collections to date cover the work billed, and thus there is no financial risk.

MWKL is working for an international company to provide engineering services, procurement services and a technology license for a proposed ammonia plant in Iran. Heads of Agreement are in place. The total size of the contract is expected to be in the $17 million range. Billings on this contract were about $3.6 million in 2002 and $10 million in 2003. Collections to date cover the cost of the work billed, and thus there is no financial risk. The technology is well understood, and MWKL does not see any significant technical risk.

All of the above work has been done by MWKL in the U.K.

MWKL has investigated other projects in Iran, but none are active at this time.

The business represents approximately 3% of the revenues of MWKL.

Granherne Limited

Granherne Limited, a U.K. corporation, headquartered in Leatherhead, England, performs limited scope consulting engineering assignments in the U.K. for entities which have potential or actual interests in projects located in sanctioned countries. Such work for Iran for 2002 was approximately $1 million. Work for 2003 declined to just under $500 thousand. 2004 is expected to be similar. All of the work is well within Granherne's technical expertise. Customers included international companies. They are large and financially secure entities, and there is no real financial risk associated with the work.

The business represents approximately 5 % of the revenues of Granherne.

GVA Consultants

GVA Consultants (GVA), a Swedish corporation, headquartered in Goteborg, Sweden, performs engineering work relating to oilfield activity in Iran, typically related to the design of vessels and offshore platform structures. The project currently underway to perform engineering and design work for a semisubmersible offshore platform being constructed in Iran was undertaken before GVA's acquisition by Halliburton Company in the fall of 2001. Revenues for work on this project in 2002 were about $6.6 million. 2003 Revenues are expected to be approximately $3.8 million through year end. 2004 revenues are expected to be in the range of $2 million. Work on this project will likely continue at a reduced level into 2005. Collections to date have covered costs, and there are no significant remaining financial risks. The design is a relatively standard one, and there are no unusual technical or engineering risks.

A tender was recently submitted by GVA for the design of one or two tanker vessels; if obtained, such additional work would amount to about $2.8 million, assuming the Iranian entity involved chose to take two vessels. No order has been received as of the time of this report.

The business represents approximately 15 % of the revenues of GVA.

Total Revenues in Iran

The total revenues from Iran of all Halliburton affiliates represent approximately one-half of one percent of the revenue of Halliburton Company and do not appear to be material to the Company from a revenue or revenue risk perspective.

Contact
Wendy Hall
wendy.hall@halliburton.com
Halliburton, Public Relations
(p) 713.759.2605

Employment Contact
Overseas & US Employment with KBR
www.kbrjobs.com
(p) 866.308.5239

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Supplier/Procurement Contact
Dave Ireland
dave.ireland@halliburton.com

Supplier Diversity Contact
Linda Holloway
linda.holloway@halliburton.com

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