Risk Management University of Houston Energy Case Study

1. Risk ManagementUniversity of Houston Energy Case Study February 2012 George E. Jones Director of Risk Management 10200 Bellaire Blvd Houston, TX 77072

2. Agenda • Halliburton Company Overview • What is “fracing” all about? • Risk Management at Halliburton • Organization • Objectives & Strategy • Linkages • Insurance Programs • Tactical Approach • Program Chart • Business Unit Support • Contract Review • Surety Bonds • Compliance Certificates • Claim Organization • Appendix • Insurance Programs – Purpose and Scope • Financial Performance

3. Halliburton Global Franchise Halliburton Locations Halliburton Headquarters Halliburton Research Centers 2011FASTFACTS OperationalCountries ResearchCenters Corporate Headquarters Founded: Employees Customers 1919 Nearly 70,000 80 14 Houston Dubai National, International and Independent entities worldwide

4. Halliburton Organization

5. 2011 Revenue Breakdown North America 58% 42% International

6. Outperforming the Competition Total Revenue (Indexed) Q108 to Q411 Total Operating Income** (Indexed) Q108 to Q411 4Q 11 1Q 08 4Q 09 4Q 11 4Q 09 1Q 08 *Pro forma **Excludes certain charges Q1 2008 = 100

7. Supply/Demand Outlook Encouraging for Energy Service Increasing demand for liquids … … reducing the industry’s spare capacity World Oil Demand (MMb/d) OPEC Effective Spare Capacity (MMb/d) Forecast Source: International Energy Agency

8. Market Drivers in the Upcoming Cycle Deepwater Unconventionals Mature Fields

9. Continued Growth in Unconventionals Unconventional Basins Tight Gas Shale Gas Coalbed Methane Sources: EIA, “Worldwide Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States”, April 2011; ARI, December 2009; EPRC, December 2009

10. CleanSuiteSM of Environmentally Friendly Technologies CleanStream® Service • Uses ultra-violet light to destroy bacteria CleanWaveTM Water Treatment System • High throughput, low energy use water recycling system CleanStimTM Fracturing Formulation • Ingredients sourced exclusively from the food industry

11. Risk Management Organization Chart

12. Risk Management Objectives and Strategy Objectives Minimize total cost of risk (Retained Losses + Insurance Premium) through use of insurance or retained risk programs Insurance just one type of risk mitigation - typically last resort Other risk mitigation includes Operational, Legal, Finance, etc. Ensure compliance with compulsory and contractual insurance requirements Strategy Insurance risk transfer employed for: Catastrophic Risks where feasible Exposures where premiums are less than expected losses Maintain convenience factor coverages, e.g. claim servicing, etc Retain uninsurable and mitigated risks Maintain capability to provide proof of insurance compliance

13. Risk Management Linkages Legal Department Contract review Claim support Compliance with claim notification requirements Review claim reserves Supervise litigated claims Global F&A / Real Estate Information for underwriting process (revenue, payroll, property values, etc…) With RM guidance, assist with local insurance policies Ad-hoc insurance placements Compliance with “admitted insurance” laws Claim support Operations Front-line knowledge of new risk activities (projects, business strategy, etc…) Customer facing risk negotiations Finance Investor Relations –Information for insurance marketing Corporate Finance –Financial analysis expertise Treasury Operations –Financial guarantees for self-insurance programs

14. Insurance Program – Tactical Approach • Align RM Program with HAL’s risk appetite • Present insurance plans to Treasurer/CFO for feedback and approval • Maintain strong relationships with underwriters • Leads to improved coverage terms • Facilitates claim resolution • Stabilizes market capacity available to HAL • Maintain highest underwriting security • Utilize rating information from intermediaries and rating agencies • Evaluate HAL’s aggregate exposure to underwriters across all programs • Approve any exceptions to ratings policy • Optimize insurance program renewals • Develop renewal strategies in collaboration with intermediaries for each program outlining key objectives • Verify key coverage terms are included prior to inception

15. Insurance Program Aon Alliant Onshore Property Excess Liability GL / AL / EL Aon • Primary Casualty Program • GL, EL, WC, AL • 10M limit • 10M retention – GL,EL,AL • 2M retention – WC • Internal reserve for ultimate unpaid exposure • Collateralized to estimated exposure • ~80 locally admitted polices McGriff D&O Liability Side A DIC McGriff McGriff Aon Alliant Alliant Alliant Alliant Vessels Cargo Fiduciary Liability Crime Air Craft Well Control Offshore Property Deductible Type of Coverage Broker / $Premium

16. RM coordinates with Legal Department / Procurement for contract reviews Legal Department contract reviews typically occur in CAS Vendor reviews typically done via procurement rather than Legal Department Any unusual / unapproved insurance language forwarded to RM for review Guidelines Given to Legal Department / Procurement which specify acceptable insurance language Guidelines include actual verbiage Guidelines include rationale for changes that can be provided directly to the customer Regular presentations made to Legal and Procurement by RM Common principles for insurance qualifications Insurance is intended to “support” indemnity and should not be a risk transfer mechanism Vague provisions should be clarified to avoid taking on more risk than expected Contract Management

17. Surety Bonds—Q3 2011 Surety Utilization (millions) U.S. • Current Exposure to Surety Bonds / LC’s • Breakdown of HAL Surety Bond exposure • Performance (65%) • Labor (15%) • Court Appeal (6%) • Customs (5%) Venezuela 276.3 Mexico Colombia Brazil Argentina Note: All KBR surety guarantees gone as of Q1 2011

18. Insurance Certificates—2,100 Outstanding as of Q2 2011 Document evidencing HAL’s insurance coverage Contractual requirement Customer: Insurance to support indemnity structure including 1st party and liability Lease: Insurance for non-owned property in HAL’s care and liability Jurisdictional requirement Compulsory Licensing Permitting International 882 U.S. 1,186 Vessels 62

19. Claim Management Organization Services Process and manage all insurance program claims Utilize onsite TPA, ESIS, for primary claims Liaise with insurers and brokers on risk transfer programs Leverage insurer relationships to maximize claim recoveries Support Legal Department claim investigation/management Provide risk analysis & loss prevention support Manage production of third party actuarial opinion over the future development of losses Work with F&A to coordinate booking of appropriate reserves Technology Maintain risk management & claim reporting systems (Risk Advantage, HRM) Provide underwriting and compliance information Management reporting

20. Appendix • Insurance Programs • Primary Casualty • Excess Liability • Property • D&O • Fiduciary • Crime • Vessels • Well Control • Cargo • 2011 Financial Performance

21. Insurance Programs • Primary Casualty • Purpose and Scope • Comprised of Workers’ Compensation, Employer’s Liability, General Liability and Auto Liability • Statutory and contractual compliance • Retain risks which cannot be efficiently transferred to insurers • Provide claim services for losses within retention     • Coverage territory is global • Includes local programs in 37 countries • Excess Liability • Purpose and Scope • Provides worldwide coverage for bodily injury and property damage liability • Necessary for compliance with clients' contractual requirements • Provides coverage excess of the following primary programs: • Employer's Liability • General Liability • Automobile Liability • Aircraft Liability • Protection & Indemnity (Vessel Liability)

22. Insurance Programs • Property • Purpose and Scope • Coverage against physical loss or damage to onshore property worldwide • Covers equipment at onshore wellsites up to $15mm per occurrence • Covers losses due to Terrorism and Political Violence • Does not cover true “political risk” e.g. nationalization, expropriation, confiscation, deprivation • Coverage for business interruption resulting from physical damage to covered properties • Applies to facilities owned by Halliburton and property of others for which Halliburton has assumed liability • Provides compliance with contractual lease requirements • D&O • Purpose and Scope • Coverage for personal liability of Ds and Os relating to their actions in their capacity as a director or officer • Coverage for Ds and Os while acting on charitable company boards if at request of Company • Coverage for cost of defense for alleged wrongful acts • Coverage to Halliburton against securities claims and indemnity obligations to the directors and officers • Includes local programs in 34 countries

23. Insurance Programs • Fiduciary Liability • Purpose and Scope • Covers all Company sponsored benefit plans • Provides liability coverage for alleged failure to prudently manage benefit plans • Provides coverage for errors and omissions committed in benefit plan administration • Indemnifies against personal liability of fiduciaries • Covers Company for indemnifiable claims • Crime • Purpose and Scope • Coverage for loss arising due to employee theft of money or property • Coverage for theft of money by a non-employee, including theft via computer or funds transfer fraud • Component of coverage required for compliance with ERISA

24. Insurance Programs • Vessels • Purpose and Scope • Covers physical damage to owned vessels and equipment on chartered vessels • Covers bodily injury and property damage to third parties associated with vessel • Covers removal of wreck and debris • Certification for statutory and contractual obligations • Well Control • Purpose and Scope • Covers physical damage to owned offshore platforms and pipelines • Covers control of well, redrill, pollution liability and 3rd party property • Certification for statutory and contractual obligations

25. Insurance Programs • Cargo • Purpose and Scope • Covers physical loss or damage to goods in commercial transit • Coverage provided for Company property and property the Company is obligated to insure for another party • Provides access to claim adjusting network required in CIF sales • Provides bonding services for impounded cargo • Contractual compliance with international equipment sales • Statutory compliance in some jurisdictions

26. Geographic Results

27. Segment Results