Once considered the most complex solution, we are now driven by the commercial imperative to use that technology to enhance our position and grow our business in the changing energy marketplace. This is the second of a series of articles reviewing the application of the new technology to the oil and gas industry. In the first article, the application of the technology to the upstream industry was described, including a description of the current opportunity in this fast-growing area and the technical and commercial challenges. In that article, John Hofmeister, president, Halliburton Energy Services, emphasized the importance of developing a technology that "works the first time for the right marketplace at the right time in an energy-competitive world." Later in the year, more articles will describe the deployment of the SHE technology to other markets, including gas gathering and processing and downstream industries. The Future of the Industry While the oil industry is cyclical, the rate of change of technology driven by the industry's need to continue to produce, transport and refine oil and gas faster and more economically presents tremendous business opportunity for the years ahead. In the last few years, we have seen the development of microturbines, combined-cycle generation, gas processing and gathering, interactive drilling and production, and data acquisition and management solutions for the oil and gas industry. These developments may make us realize the full potential of the industry and provide opportunity for us to continue to grow with it. Oil and gas production can be enhanced with new technologies, but these new technologies can only provide incremental value with new and existing facilities. To fully realize the industry's growth potential, new technologies will have to be integrated into existing facilities in some manner. Halliburton plans to be in the vanguard of this next stage of the industry's growth. In fact, our own need for innovation and technology development has accelerated in recent years. Some of the key areas Halliburton is focusing its attention on include: - Improving its information technology - Exploring technologies to enable new business opportunities by making more information available on-line and at remote well sites. - Bringing together new products for drilling and production, such as hydraulic jars and the Multistage Drilling Process, and other technologies that integrate equipment and components with new functionality for customers. - Creating technologies for gas gathering and processing that will use lower costs and new technology to drive the next evolution of the industry. - Creating technologies to protect the environment and minimize its impact as the drilling and production operations move into areas previously inaccessible to humans. - Applying such technologies to enhance its products and services, such as cementing, completion and production technology, casing and drilling. Halliburton's investment in technology development is an investment in our own future. In the long run, we plan to emerge as the provider of a more productive, more secure and more environmentally friendly source of energy than is available today. For further information on the applications of SHE technology to the industry, please visit the Halliburton web site at http://www.Halliburton.com, or contact Joe Spitz at 281-583-4900. About Halliburton Company Halliburton's stock is traded on the New York Stock Exchange under the ticker symbol HAL, and information is available on the World Wide Web at http://www.Halliburton.com. About the Halliburton Technology Group The Halliburton Technology Group's primary product line is SHE technology, which enables customers to optimize productivity and improve product performance while reducing costs. Halliburton owns or is the licensee of several SHE technologies. The company has also developed new technologies for surface acoustic wave devices, wireline logging, wellsite drilling and processing, completion and production applications, completions, and applications for the enhanced recovery of oil and gas. With business partners, the technology group provides product solutions for the energy services industry. To maintain a competitive edge, the company supports an advanced research and development program and an effective product support system. Halliburton spends approximately 5.8 percent of revenue on research and development, and this level of investment is expected to grow. The company relies on the extensive expertise and knowledge of its employees to develop new and improved products and technologies. The company's professional services group provides these innovative technologies to customers and its customers' employees as a complete solution. For more information on SHE technology and Halliburton's solutions for the energy services industry, go to http://www.Halliburton.com. See Other Products, Services, and Technologies and back to Halliburton home page on http://www.Halliburton.com. For More Information Contact: Joe Spitz or Dave Stall Halliburton Company One Riverway, Suite 3700 Houston, TX 77056 281-514-4700 or To the attention of: John E. Borne Technical Marketing Halliburton Energy Services, Inc. 500 Poydras Street, Suite 2400 New Orleans, LA 70112-3254 Phone: (504) 476-4131 FAX: (504) 382-4934 Email: jbourne@hhalliburton.com Visit: www.halliburton.com (This release includes certain information that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding future applications of the SHE technology, future growth in the demand for the SHE technology, integration of the SHE technology into other products, the ability to continue to expand and enhance the technology, the ability to provide the SHE technology through integrated service offerings, and market acceptance of the SHE technology.) CONTACT: Halliburton Company Ed Kinney or Kevin Telep, 713-627-8478 *************************************************************** HALLIBURTON TO ACQUIRE OILFIELD SERVICES COMPANY Halliburton and Baker Hughes announced today that they have signed an agreement for Halliburton to purchase substantially all of the stock of Baker Hughes' oilfield services company for about $7.1 billion in cash. The agreement also provides that Baker Hughes will acquire a significant portion of Halliburton's natural gas gathering and production business for stock. Under the terms of the agreement, Halliburton shareholders will own between 54% and 57% of the combined company, and Baker Hughes shareholders will own between 43% and 46% of the combined company. The combination will give Halliburton access to natural gas production and gathering systems in North America, South America and Europe. The agreement will require approval by the Baker Hughes and Halliburton shareholders, and is expected to close in the third quarter of 2002. The boards of directors of Baker Hughes and Halliburton have approved the agreement. http://www.halliburton.com http://www.bakerhughes.com US DOLLAR GAINS FIRM ROUND CUT AS TALKS TO SAVE ECONOMIC CRISIS The U.S. dollar traded weaker against the yen and the euro as investors debated whether the worst U.S. economic crisis in a half-century would be averted as talks continued among central bankers in Japan and Europe, and Wall Street and financial markets voted on the government's ability to contain financial panic. http://quote.business.com/money/ft/dec011104brl.htm ************************************************************** FINANCIAL SUMMARY During December $33 billion was invested in the stock market $1.1 trillion in U.S. corporate bonds $17 billion in U.S. government securities and $1.1 trillion in mutual funds. Total assets of all kinds, including stocks, bonds, mutual funds, commercial paper, corporate loans and others rose $1.9 trillion to $45.1 trillion at the end of December, a 4.2% increase from the end of November, and 3.4% more than at the end of December 2000. In comparison, total assets at the end of 1999 were $36.6 trillion. The value of the Standard & Poor's 500-stock index grew 5.4% during the month to $46.42; during the twelve months it rose 11.6%.