Halliburton’s energy services business can be viewed as consisting of two complementary offerings: providing discrete, individual oil field services on the one hand, and combining our technologies in a way to help customers taking on large integrated field development projects. The technology architecture is built on a foundation of discrete technologies. These are some of Halliburton’s core competencies — materials science, manufacturing, fabrication and service delivery.

These technologies lead to the development of new and better discrete products and services, from better pressure pumping equipment to the new Anaconda drilling system.

These discrete products can be grouped into flagship areas that cut across traditional boundaries and combine elements from the Energy Services Group and the Engineering and Construction Group. A flagship is an integrated technology area — a bundle of technologies that meet a certain set of customer needs.

Halliburton’s technology flagships are the five areas that are most critical to Halliburton’s customers, and the areas of excellence that are needed to succeed in the company’s second area of business — the integrated megaprojects that will take on an increasing importance in coming years. Halliburton is pursuing excellence in these five areas in part because together they provide the breadth of capability needed to win the multibillion-dollar integrated projects of the future.

Halliburton’s technology flagships are:

1. Real-time reservoir solutions — building a complete, accurate, “picture” of the reservoir from real-time data, which provides the customer with the answers needed to make the optimum development decisions on a timely basis.

2. Advanced well construction — services that allow operators to reduce the cost of drilling wells in the most challenging environments, and to tap reservoirs that were previously uneconomical.

3. Advanced well production — completion, intervention, operation and maintenance technologies that maximize hydrocarbon flow, increase the percentage of recoverable reserves, and compress production time.

4. Deep water technologies — the key products, services, and project management skills needed to develop reservoirs in water depths greater than 1,500 feet.

5. Gas monetization — the ability to extract natural gas and convert it into economically viable products, from LNG to fertilizer.

The flagships are built from excellence in discrete products and services. Excellence in advanced well construction is built on Halliburton’s 80 years of leadership in pressure pumping. Excellence in gas monetization is built on Kellogg Brown & Root’s proprietary process technologies. Continued excellence in discrete services is essential to being the leader in these five areas.

As a result, about 80% of Halliburton’s 2000 investment in research and development of $231 million went into technologies aimed at improving discrete products and services. Investment decisions are based on a combination of the needs of the product/service line and its contribution to the success of the flagship.

It is important to recognize that individual technologies and products may have a primary application to one flagship, but may also contribute to other flagships as well. For example, many drilling innovations from Sperry-Sun contribute to reservoir evaluation as well as advanced well construction systems. There is no simple one-to-one correspondence between products and flagships; there are often multiple beneficial relationships.

Our technology architecture is dynamic. It will evolve as new technologies lead to new products, and as the requirements for success in winning and executing mega-projects develop over time. It does, however, provide a conceptual framework for understanding how Halliburton’s many facets work together and how they are being managed to create value for customers and shareholders.