NEW YORK -
When it comes to making money from a
war in Iraq, few can match the firepower of the company once
headed by Vice President Dick Cheney.
Houston-based Halliburton Co. can build roads and
bridges and camps for American forces. It can transport
personnel and provide other logistics. It can fight any fires
Iraqi leader Saddam Hussein might set. And after the war,
assuming a U.S. victory, it can help restore Iraq's
infrastructure and oil production.
While questions remain over how much the work will boost
the company's stock price, Halliburton's KBR engineering and
construction division "is basically the 'corps of engineers' to
the U.S. military," said Jim Wicklund, an analyst at Banc of
America Securities. "It is expected that the occupying army's
infrastructure could in large part be supplied by KBR."
At the same time, the company's oilfield services business,
which is second only to Schlumberger Ltd., is likely to
supply most of the heavy equipment to fight fires that Iraqi
forces could set to oil wells and oil fields, as they did in
Kuwait during the 1991 Persian Gulf War.
And should the U.S. emerge victorious, Halliburton -- which
develops oil fields and drills for oil all over the world --
has the connections and businesses to play a major role in
rebuilding Iraq and ramping the nation's oil production
capacity back up to pre-1991 Persian Gulf War levels.
"They have the businesses. They have the government
relationship already well-established, and, as we all know,
Cheney was the CEO, so it makes logical sense," said Denis
Walsh, an equity analyst who covers the energy sector for State
Street Research and Management.
NO COMMENT ON CONTRACTS
A Halliburton spokeswoman declined to speculate on "what
may or may not happen with regards to Iraq."
She referred all queries to the U.S. Department of Defense (DOD) and the U.S. Agency for International Development, which
both said that contracts for fighting fires and rebuilding
Iraq's infrastructure have yet to be awarded. Neither agency
would disclose whether Halliburton had submitted any bids.
Other companies that could bid for firefighting contracts
include Boots & Coots International Well Control Inc.,
Canada's Safety Boss Inc., RPC Inc.'s Cudd Pressure
Control and Superior Energy Services Inc.'s Wild Well
Reports earlier this month said that Halliburton won a
contract to oversee firefighting in Iraq's oilfields but that
has not been confirmed by either the company or the DOD.
"It is our information that a contract framework has
already been signed," said Wicklund, who rates Halliburton a
"buy" and does not own any of its shares.
This wouldn't be the first time Halliburton has played an
important role in a U.S. war. Years before Cheney's stint at
the helm, a predecessor company built the Corpus Christi Naval
Air Station and several warships during World War II. It also
helped build the Phan Rang Air Base in Vietnam in 1965.
More recently, after the Persian Gulf War, Halliburton
helped put out oil well fires and repaired damaged buildings in
Kuwait. It also provided food, laundry, transportation and
other services to U.S. peacekeeping forces in Bosnia, Croatia
and Hungary during the Balkans conflict in the 1990s.
Estimates of how much Halliburton and other companies could
reap from the infrastructure and restoration work vary, but
analyst Michael Urban of Deutsche Bank said it could be as much
as a total of $3 billion.
DON'T QUIT YOUR DAY JOB
How much Halliburton would get is difficult to gauge,
though any contracts it wins would certainly generate revenue,
cash flow and earnings.
The potential contracts come at a time when Halliburton is
contending with its liability for asbestos-related personal
injury lawsuits, though the company made progress last December
with a $4 billion settlement deal.
"The stock price would reflect that they have had investor
concern over the ultimate (asbestos) liability," said Pierre
Conner, an analyst with Hibernia Southcoast Capital who rates
Halliburton a "buy" and does not own any of its shares.
The contracts also may not do much for the company's stock
price, since the firefighting business is not a recurring one
and the profit margins of the construction business are not
"While both would be positives to Halliburton, they aren't
in our opinion overriding reasons to buy the stock," Wicklund
"I would think if you got any jump in the stock, it would
be short-lived and somewhat muted by history. It's like winning
a $3 lottery ticket. It beats not winning, but you can't quit
your day job."
Halliburton shares were up 54 cents or about 2.6 percent to
$20.36 in afternoon trading on the New York Stock Exchange on
Wednesday. The stock is up 11.7 percent this year through
Tuesday's close, outperforming Schlumberger, which is down 6.2
percent, as well as the Philadelphia Stock Exchange Oil Service
Index, which is down less than 1 percent, both in same
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