Halliburton Company Annual Report 2018

Plain-text annual report

2018 Annual & Sustainability Report CONTENTS ANNUAL ❯❯ Financial Highlights Stakeholder Letter Halliburton Performance SUSTAINABILITY ❯❯ About Halliburton Guiding Principles on Sustainability Our Mission, Vision & Values Materiality 1 2 4 6 8 10 12 26 Halliburton Management System Corporate Governance, Business Ethics & Stakeholder Engagement 34 Supply Chain 38 Halliburton Community 13 Journey to ZERO 19 Service Quality Health and Safety 20 Environmental Stewardship 22 Corporate Governance Business Ethics Human Rights Stakeholder Engagement 27 29 32 32 Supply Chain Governance Local Content and Supplier Diversity 35 36 Community Engagement Halliburton Workforce 39 41 Environmental & Social Data United Nations Sustainable Development Goals Mapping GRI Content Index Sustainability Accounting Standards Board Stakeholder Engagement About This Report 48 49 50 52 54 Inside back cover On the cover: Two Halliburton team members working at our test well site in Texas. In 2018, Halliburton partnered with Texas Tech University to design Halliburton coveralls that are specifically fitted for our female employees. FINANCIAL HIGHLIGHTS $24 billion We generated $24 billion of total Company revenue, a 16 percent increase from 2017, with improvements across all of our product service lines globally. 40 percent In our Completion and Production division, we capitalized on the market recovery in North America, delivering operating income growth of 40 percent year over year. $1 billion We continued our focus on returning capital to shareholders through share repurchases and dividends, which totaled over $1 billion in 2018. (Millions of dollars and shares, except per share data) 20161 20171 20181 Revenue $ 15,877 $ 20,620 $ 23,995 Operating Income (Loss) $ (6,770) $ 1,374 $ 2,467 Amounts Attributable to Company Shareholders: Net Income (Loss) from Continuing Operations Diluted Income per Share from Continuing Operations Cash Dividends per Share Diluted Common Shares Outstanding $ (5,761) $ $ (6.69) 0.72 861 $ $ $ (444) $ 1,656 (0.51) 0.72 870 $ $ 1.89 0.72 877 Net Working Capital 2 $ 7,654 $ 5,915 $ 6,349 Total Assets Total Debt Total Shareholders’ Equity Capital Expenditures Depreciation, Depletion and Amortization Total Capitalization3 Debt to Total Capitalization4 $ 27,000 $ 25,085 $ 25,982 $ 12,384 $ 10,942 $ 10,457 $ $ $ 9,448 798 1,503 $ $ $ 8,349 1,373 1,556 $ $ $ 9,544 2,026 1,606 $ 21,832 $ 19,291 $ 20,001 57% 57% 52% 1 Reported results during these periods include impairments and other charges of $265 million for the year ended December 31, 2018, impairments and other charges of $647 million for the year ended December 31, 2017, and merger-related costs and termination fee of $4.1 billion and impairments and other charges of $3.4 billion for the year ended December 31, 2016. 2 Working Capital is deﬁned as total current assets less total current liabilities. 3 Total Capitalization is deﬁned as total debt plus total shareholders’ equity. 4 Debt to Total Capitalization is deﬁned as total debt divided by the sum of total debt plus total shareholders’ equity. 9 . 5 1 $ 6 . 0 2 $ 0 . 4 2 $ 0 2 6 $ 6 2 6 $ 0 3 6 $ 8 . 0 $ 4 . 1 $ 0 . 2 $ % 2 . 1 % 4 . 2 1 % 3 . 4 1 % 4 . 1 1 % 6 . 9 % 3 . 9 16 17 18 16 17 18 16 17 18 16 17 18 16 17 18 Revenue in billions Dividends to Shareholders in millions Capital Expenditures in billions Completion and Production Operating Margins in percent Drilling and Evaluation Operating Margins in percent 1 TO OUR STAKEHOLDERS As we celebrate 100 years of growth, innovation and unparalleled customer service, Halliburton remains committed to generating industry-leading returns for our shareholders, ﬂawlessly executing for our customers and outperforming our peers. We commence our next 100 years with a clear sense of purpose. Our industry produces affordable and reliable energy that improves the quality of life for people around the world, and reasonable projections show that oil and gas will remain an essential part of the world’s energy portfolio for many years to come. At Halliburton, our purpose is to help our customers satisfy the world’s need for oil and gas – more effectively and efﬁciently, safely and ethically, while minimizing environmental impact and generating leading returns for our shareholders. This purpose aligns with our core values and underlies our strategy, value proposition and ﬁnancial objectives. During 2018, we once again delivered superior growth and returns by capitalizing on the market rebound in North America and the emerging international recovery. We maintained our leading position in a tough, ﬁercely competitive market, sustained a steady pace of new technology development and improved service quality – all with a goal of helping our customers maximize their asset value and delivering leading returns to our shareholders. Thanks to the exceptional performance and commitment of over 60,000 Halliburton employees, we outperformed our peers and generated approximately $3.2 billion in operating cash ﬂow. At the same time, we reduced our debt by $400 million, strengthening our balance sheet and enhancing our ﬁnancial ﬂexibility. We continued to exercise capital discipline, while also advancing our differentiating technologies and digital capabilities and expanding our product and service offerings. We also returned $1 billion to our shareholders in the form of dividends and stock repurchases. As we enter 2019, our industry is going through a transformation brought on by the shale revolution and the recent down cycle. North America is now the world’s leading oil producer, the industry is more efﬁcient than ever before and our customers are increasingly focused on generating cash ﬂow. We believe this evolving landscape plays to Halliburton’s strengths. As we have proven over the years and demonstrated again in 2018 – our technology, our people, our customer alignment and our ﬁnancial discipline position us to thrive in any market condition and to deliver leading returns for our shareholders. In 2019, we will continue to focus on the right things. We have permanently removed over $1 billion in costs over the last three years, and we will continue to reduce costs through our continuous improvement initiatives. We will effectively use our coherent asset base through increasing asset velocity and superior job site execution. We will be disciplined in our capital spending, while continuing to support our business, developing differentiating technologies and selectively investing to grow our product and services portfolio. And we will focus on optimizing cash ﬂow from our operations and producing superior returns. Sustainability is imbedded in our strategy and is integral to our overall mission. We seek to deliver superior ﬁnancial performance and returns while minimizing environmental impacts and acting as a responsible corporate citizen. Our Guiding Principles for Sustainability provide the framework for sustainable action and align with our purpose and core values. Because sustainability performance is an important measure of our overall performance, this year we are combining our annual ﬁnancial report with our corporate sustainability report. We believe that this combined report further emphasizes the strategic signiﬁcance of sustainability to our Company. “We seek to deliver superior ﬁnancial performance and returns while minimizing environmental impacts and acting as a responsible corporate citizen.” Ethics and integrity are at the heart of the Halliburton corporate culture and provide the foundation for our Guiding Principles, our operations and our future. They are the foundation for everything we do. By adhering to the Halliburton Code of Business Conduct, we conduct our business “the RED way” – in a responsible, ethical and diligent manner. This includes a strong human rights policy, a zero-tolerance anti-corruption policy, a clear mandate to use and develop local resources and a strong commitment to create social and economic opportunities for the local communities in which we operate. We earn the trust of our stakeholders through relationships based on honesty, transparency and respect. And we hold our vendors, suppliers, and customers to the same high standard of integrity. 2 Halliburton 2018 Annual & Sustainability Report “We look forward to our next century and continuing to deliver superior service and differentiating technologies to our customers and strong cash ﬂow and industry- leading returns to our shareholders.” Our commitment to our stakeholders, combined with the delivery of superior services and products, has earned Halliburton the reputation as the execution company – and our people are at the heart of this reputation. We are successful because of the continuous dedication of our employees to provide our customers with outstand- ing service. We strive to provide our employees a work environment that is challenging, focused on diversity and inclusion and free of discrimination or harassment. Our employees receive essential safety training and are responsible for Halliburton’s safety culture. We provide a structured development program to help our employees build skills and competencies and develop leadership capabilities. At Halliburton, the way we look out for one another day after day and our sense of camaraderie engenders a high degree of trust, which in turn fosters respect for one another, the people we work with and the communities in which we live. We prioritize health, safety and environmental stewardship. We remain committed to advancing our Journey to ZERO, which is the Company’s path to achieve zero safety incidents, environmental incidents and non- productive time every day, on every job. At Halliburton, environmental stewardship includes the development of new technology that seeks to minimize social and environmental impacts while delivering value to our customers. We make signiﬁcant investments in research and develop- ment to create solutions that allow our customers to maximize the value of their assets – while helping them reduce energy and water usage, curb emissions and shrink their environmen- tal footprint. For example, our surface equipment is among the cleanest available, and it comprises the largest ﬂeet of Tier 4-compliant diesel engines currently in operation in the U.S. In addition, Halliburton is developing and planning to deploy electrically powered pressure pumping equipment going forward. We have also made signiﬁcant investments in our surface efﬁciency strategy, including the ExpressSand™ containerized proppant delivery system, which has helped to signiﬁcantly reduce equipment and logistics needs, along with noise and dust generation on the wellsite. We have also developed new chemistries and separation technologies that enable the recycling of ﬂowback water and help our customers reduce the volume of fresh water utilized in hydraulic fracturing operations. In closing, we want to thank our employees, our Board of Directors and our shareholders for the vital role they all play in the success of Halliburton. In 2019, we celebrate 100 years since our founder, Erle P. Halliburton, started an oil well cementing business with a borrowed pump, a horse-drawn wagon and a mixing box. Reaching our centennial is a milestone few companies achieve and it is a testament to the hard work of our employees, who deliver on our core values of integrity, safety, creativity and reliability. Our Company has innovated, collaborated and executed through economic and industry cycles to become a global leader in oilﬁeld services and technology. We look forward to our next century and continuing to deliver superior service and differentiating technologies to our customers and strong cash ﬂow and industry-leading returns to our shareholders. JEFFREY A. MILLER Chairman of the Board, President and Chief Executive Ofﬁcer LANCE T. LOEFFLER Executive Vice President and Chief Financial Ofﬁcer LAWRENCE J. POPE Executive Vice President of Administration and Chief Human Resources Ofﬁcer ROBB L. VOYLES Executive Vice President, Secretary and General Counsel ERIC J. CARRE Executive Vice President Global Business Lines and Chief Health, Safety and Environment Ofﬁcer MARK J. RICHARD President, Western Hemisphere JOE D. RAINEY President, Eastern Hemisphere 3 Halliburton Performance NORTH AMERICA 2018 was a tale of two halves for the North American market. During the ﬁrst two quarters, Halliburton capitalized on the steady growth in rig count and completions intensity and delivered solid revenue and margin performance. In the second half of the year, the market softened, as takeaway capacity limitations, customer budget constraints and a sharp decline in commodity prices curbed completions activity. Halliburton is well prepared to deliver superior returns for our shareholders in this dynamic market. We are the leading service provider in unconventionals – a unique and valuable resource, capable of meeting a signiﬁcant portion of global oil and gas demand. As we have proven over the years and again in 2018, our innovative technology, the quality of our services, our customer alignment, and our market presence in all U.S. unconventional basins position us to continue helping our customers lead the shale revolution into the future. Our technologies differentiate us from the rest of the market and are moving beyond the signiﬁcant surface efﬁciencies achieved in the last few years. We are focused on developing technology that will enable our customers to increase well productivity. For example, in 2018, we introduced Prodigi™ AB intelligent fracturing service that brings automation to hydraulic fracturing. Prodigi AB automates the breakdown process of a fracturing treatment. This helps increase production from our customers’ assets, achieve consistent cluster performance, and reduce wear and tear on our equipment. By the end of 2018, we had successfully deployed Prodigi AB service across all U.S. shale basins. It had been used on more than 1,500 stages for 20 different customers across the country. Artiﬁcial lift is a critical capability for unconventionals, as well as mature ﬁelds, and Halliburton has strategically invested to expand our artiﬁcial lift portfolio. In 2018, our Artiﬁcial Lift business achieved 43 percent sequential revenue growth and delivered outstanding margins. We are the second largest ESP provider in North America, and grew our share of the business in U.S. land in 2018, led by the Permian and the MidCon basins. Looking forward to 2019, we will continue to build the foundation for a longer-term recovery. As North American oil production reaches historic highs and operators shift their focus from production growth to cash ﬂow generation, Halliburton’s technology, people, customer relationships and ﬁnancial discipline position us to thrive. We intend to respond to the changing market environment, reduce capital spending, develop differentiating technologies and generate strong cash ﬂow. After a storied 100 years in North America, Halliburton remains the leader in this dynamic market. 2018 North America Highlights: $14.4 billion Delivered $14.4 billion in revenue, a 25 percent increase year over year. Outperformed Outperformed growth in North America rig count. Record Stage Count Achieved record stage count per hydraulic fracturing crew, higher than at 2014 peak. 4 Halliburton 2018 Annual & Sustainability Report INTERNATIONAL In 2018, we saw solid evidence of the long-awaited recovery in the international markets. This recovery started with mature ﬁelds and was spearheaded by the national oil companies. National oil companies look for a collaborative approach to tackling their various challenges – and collaboration is integral to Halliburton’s value proposition. Halliburton is better positioned than ever before to take advantage of the continuing international recovery. We operate in over 80 countries and are a leader in the completion and production technologies that are key to the development of mature ﬁelds. Over the last few years, we have signiﬁcantly increased our product service line presence in various geographies, expanded our manufacturing capacity in Singapore and opened technology centers in Saudi Arabia, India and Brazil. In 2018, we won several major foothold contracts in different geographies. For example, our unconventional contract with Saudi Aramco represents the largest unconventional completion contract ever awarded in the Middle East. In Norway, we secured several large offshore contracts and improved our market share through collaborating and engineering solutions with our customers. One key to competing in the international markets is reliable and economic drilling technology. In 2018, Halliburton launched the iCruise™ rotary steerable system. It is the most intelligent drilling tool on the market. The iCruise system delivers fast drilling, accurate well placement and reliable, repeatable performance for our customers. Thanks to the simple, modular design of this tool and its self-diagnostics capabilities, maintenance takes less time, which increases asset velocity, reduces repair and maintenance costs and improves returns for Halliburton. In 2018, this new drilling technology achieved successful test runs for several customers in the Middle East, and delivered the longest lateral and longest well in Argentina’s Vaca Muerta shale in our ﬁrst deployment. Halliburton entered the reactive chemistry space in 2018 through the acquisition of Athlon Solutions. Athlon is a manufacturer of chemicals for the upstream oil and gas industry and is a leading provider of specialty water and process treatment chemicals. Halliburton now has expertise in reactive chemistry and facilities, which is critical for international mature ﬁelds markets. This acquisition supports our ongoing efforts to manufacture chemicals in the Eastern Hemisphere in order to reduce transportation hazards and to be closer to our international customer base. Overall, our existing contracts and the pipeline of international projects are stronger coming into 2019. With the activity pipeline improving across all regions, Halliburton will strive to selectively balance growth and returns in the international markets. 5 2018 International Highlights: $9.6 billion Delivered $9.6 billion in revenue, a 6 percent increase year over year. Top Line Growth Delivered top line growth in every Eastern Hemisphere geography. 0.14 Registered Total Recordable Incident Rate of 0.14 in the Eastern Hemisphere – the lowest in our history. About Halliburton GUIDING PRINCIPLES ON SUSTAINABILITY Financial Performance Deliver superior value for our shareholders Health, Safety & Environment (HSE) Conduct operations that are safe and environmentally responsible Technology & Innovation Lead the industry in innovation and conscientious stewardship of global resources To outperform our competitors by delivering superior growth, margins and returns to our shareholders To advance on our Journey to ZERO, toward our vision of zero health, safety, environment or service quality incidents To develop solutions that give our customers economic access to new hydrocarbon resources and maximize the value of their existing assets $24 billion We generated $24 billion of total Company revenue, a 16 percent increase from 2017, with improve- ments across all of our product service lines globally. 40 percent In our Completion and Production division, we capitalized on the market recovery in North America, delivering operating income growth of 40 percent year over year. $1 billion We continued our focus on returning capital to shareholders through share repurchases and dividends, which totaled over $1 billion in 2018. >100 Halliburton received greater than 100 customer and industry HSE awards. 39th Halliburton was 39th in U.S. patents granted in 2018 and the only oil and gas company in the top 50. 87 percent Through initiatives such as enhancing our New Hire Employee Orientation program, Halliburton saw an 87 percent increase in HSE Training Hours from 2017. 121,000 Approximately 121,000 Safety Data Sheets (SDSs) and labels in 37 languages are available through our website. $390 million Total research and development spend increased by 8 percent year on year to $390 million. 1.8 patent efﬁciency Halliburton achieved industry-leading patent efficiency, with 1.8 patents granted for every $1 million of research and development spend, an improvement from 1.4 in 2017. 7 awards In 2018, Halliburton received 7 awards for our technology and innovation efforts; including World Oil, Harts MEA and OTC awards. ETHICS AND INTEGRITY ARE THE FOUNDATION FOR OUR GUIDING PRINCIPLES. Halliburton 2018 Annual & Sustainability Report ▼ E L P I C N R P I ▼ T N E T N I ▼ S T N E M E V E I H C A 6 Global Citizenship Enhance the economic and social well-being of our employees and the communities in which we operate Transparency Collaboration Maintain transparency in reporting and validating our progress Engage our stakeholders to help achieve results that are compatible with our stated principles To be a preferred employer and make a positive impact in the communities where we live and work To provide our stakeholders with thorough and timely information on our progress To actively communicate with key stakeholders to help achieve mutual objectives 18 Halliburton executives presented at 18 industry events last year, including Barclays CEO Energy Conference in New York City, and an HSE Panel at the Society of Petroleum Engineers meeting in Abu Dhabi. 669 reports Global Ethics and Compliance addressed 669 reports in 2018. >100 Members of our senior management team participated in over 100 investor meetings. $1 million Halliburton Foundation contributed $1 million to U.S.-based schools and higher education institutions through the University Advisory Board to support the advancement of STEM studies. $1.9 billion Halliburton corporate philanthropy, including in-kind donations and employee giving, totaled over $1.9 billion in 2018. 48 percent Halliburton increased female candidacies for key operational role readiness by 48 percent. 23 percent Overall Company female professional hiring rate for 2018. 100 percent During on-boarding, Halliburton requires 100 percent of potential suppliers to undergo a risk-evaluation process that covers export controls and sanctions screening, insurance veriﬁcations and safety training for onsite vendors. >80 percent More than 80 percent of our pro- curement spend was with suppliers located within the region where our operational activity took place. 39 Halliburton partnered with 24 universities around the world on 39 research and development projects. 192 We collaborated with customers on 192 research and development proj- ects in order to engineer solutions to maximize the value of their assets. Built on a solid foundation of ethics and integrity, our Guiding Principles for Sustainability provide the framework for our operations and our future. To ensure these principles guide every aspect of our decisions, plans and actions, we have matched each with a clearly deﬁned intent. 7 About Halliburton OUR MISSION, VISION & VALUES At Halliburton, we collaborate and engineer solutions to maximize asset value for our customers. Mission To achieve superior growth and returns for our shareholders by delivering technology and services that improve efﬁciency, increase recovery and maximize production for our customers. Our mission as a Company identiﬁes what we do today, why we do it and for whom, while our vision deﬁnes what we aspire to be and gives us an image of what success will look like. Our values are our corporate DNA, the foundation for how we relate to each other and every individual and entity with whom we interact. These are the principles that every Halliburton employee and the companies with which we do business are expected to use, live by and demonstrate on a daily basis. We listen and respond to our stakeholders’ suggestions and recommendations to create value through our services and business practices. We incorporate continuous improvement into all facets of our business, from research and development, to building our Halliburton teams, to delivering sustainable solutions to our customers. Vision To deliver a customer experience second to none, as globally competitive, creative and ethical thought leaders. Values • Integrity: Ethics and integrity are the foundation of our brand and the guiding principles for all we do. • Safety: Priority number one. We are focused on our own personal safety as well as the safety of others. • Collaboration: We work together with customers and understand that everyone has a role in providing the best solution. • Competition: We compete to win. We know that competition makes everyone stronger. • Creativity: We are resourceful. We are innovative and strive to apply the right technology and solution every time. • Reliability: We deliver what we promise. We believe the quality of our service deﬁnes who we are. • Respect: We are honest with ourselves and each other. We value our diverse skills and talents, and know we are stronger together as one family. With approximately 60,000 employees, representing 140 nationalities in over 80 countries, we help our customers maximize value throughout the lifecycle of the reservoir – from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion and optimizing production throughout the life of the asset. We serve major, national and independent oil and natural gas companies throughout the world and operate under two divisions. These divisions form the basis for the two operating segments we report, the Completion and Production segment and the Drilling and Evaluation segment. For more information on our operations and markets served, please refer to the Halliburton 2018 Form 10-K. 8 Halliburton 2018 Annual & Sustainability Report Our Business Halliburton comprises 14 product service lines (PSLs). The PSLs operate in two divisions: Drilling and Evaluation, and Completion and Production. Our Consulting and Project Management PSL works across both divisions and spearheads our integrated- services strategy. Its financial results are included in the Drilling and Evaluation division. PSLs are primarily responsible and accountable for strategy, technology development, process development, people development and capital allocation. Drilling and Evaluation Division Completion and Production Division • Baroid • Drill Bits & Services • Landmark • Sperry Drilling • Testing & Subsea • Wireline & Perforating • Artiﬁcial Lift • Cementing • Completion Tools • Multi-Chem • Pipeline & Process Services • Production Enhancement • Production Solutions Supporting Both Divisions • Consulting and Project Management GLOBAL LOCATIONS Europe, Eurasia, Sub-Saharan Africa 38 8,505 1 2 26,876 7 North America Operations: ■ North America ■ Latin America ■ Europe, Eurasia, Sub-Saharan Africa ■ Middle East, North Africa, Asia Pacific 00 000 0 Number of countries per region 2018 period ending headcount per region Major technology centers per region 13 7,371 1 Latin America We have manufacturing operations in various locations, including the United States, Canada, Malaysia, Singapore and the United Kingdom. 29 16,989 3 Middle East, North Africa, Asia Pacific 9 About Halliburton MATERIALITY Halliburton previously conducted a comprehensive materiality assessment to identify topics that are material to our long-term sustainability. The assessment, which is reviewed annually, integrated internal and external stakeholder input to identify priorities and opportunities for corporate sustainability strategy and reporting. Engaging stakeholders in this process enables testing and validation of the results of the analysis and ensures that the expectations and input of all groups are considered. Material topics were evaluated on the potential magnitude and significance of their effect on Halliburton activities and to our stakeholders. Our criteria for evaluation includes the impacts and opportunities presented by regulatory and policy changes, financial trends, environmental issues and societal concerns. Based on our continued engagement with shareholders, customers, industry groups, our Board of Directors (Board), our employees and other key stakeholders, we have expanded discussions on diversity and inclusion to include additional initiatives, corporate governance and business ethics to include human rights and environmental stewardship to include climate change. We validated our updated materiality outcomes during internal interviews with key Halliburton subject matter experts as a crucial step in preparing this report. We asked interviewees to review the importance of material topics and express their opinions on material and emerging topics in their area of expertise. We will continue to update our materiality assessment in 2019. MATERIAL TOPICS Economic • Corporate governance and business ethics (including human rights) • Economic performance • Supply chain sustainability Social • Health, safety and wellness • Diversity and inclusion • Community engagement Environment • Energy and greenhouse gases • Environmental stewardship (including climate change) Italic text denotes expansion of topic in 2018 10 Halliburton 2018 Annual & Sustainability Report MATERIALITY MATRIX R E H G I H l s r e d o h e k a t s o t e c n a t r o p m I R E W O L HSW GG CG CE EP DI ES SCS MODERATE HIGH VERY HIGH LOWER ● Economic ● Social ● Environment Impacts on the business HIGHER CG Corporate governance and business ethics EP Economic performance SCS Supply chain sustainability DI Diversity and inclusion CE Community engagement HSW Health, safety and wellness GG Energy and greenhouse gases ES Environmental stewardship Our assessment of materiality is aligned to industry best practices, including the Global Reporting Initiative (GRI), the Dow Jones Sustainability Indices (DJSI), CDP (formerly known as the Carbon Disclosure Project), the International Petroleum Industry Environmental Conservation Association (IPIECA) Oil and Gas Industry Guidance on Sustainability Reporting, the United Nations Sustainable Development Goals (UN SDGs) and the Sustainability Accounting Standards Board (SASB) Oil and Gas Services Standard. We have applied the four GRI Reporting Principles to define our report content. Stakeholder Inclusiveness is ensured by listening to feedback from stakeholder engagement.* We considered the Context of our local and global-level operations when determining the relevant topics to assess, report and prioritize. The Materiality of topics is defined by considering (1) main sustainability topics raised by Halliburton stakeholders; (2) relevance of topics for Halliburton business; (3) potential impacts to business; and (4) potential for Halliburton to influence or impact the topic. For the purposes of this report, significant locations are defined as those representing more than 10 percent of total revenue. Completeness: We include all of the Company’s material impacts and topics in this combined annual and sustainability report. Through our report development, we conducted interviews and collected applicable data to ensure that all relevant entities with significant impacts regarding material topics are providing data for inclusion. * Stakeholder Engagement data provided on page 54 11 12 Halliburton 2018 Annual & Sustainability Report HALLIBURTON MANAGEMENT SYSTEM Health, safety and environmental (HSE) and service quality (SQ) management are fundamental to Halliburton operations. Our ability to collaborate with our customers and engineer solutions to maximize asset value depends on industry- leading performance in each of these areas. HSE is one of our Guiding Principles for Sustainability and has direct oversight by the Board HSE committee. We have policies and procedures in place that deﬁne how we work, which empower our employees’ commitment to safety 24 hours a day, seven days a week. Journey to ZERO Journey to ZERO is the Company’s vision to achieve ZERO safety incidents, ZERO environmental incidents and ZERO non-productive time. This vision expresses our commitment to our employees, our customers and our communities, and articulates our priorities – to set the highest standards, embrace the challenge and make no compromises in execution. Our leadership commitment, robust management system and the competencies and commitment of our people are core elements of our success and provide the foundation of our Journey to ZERO. We have defined six elements that provide a roadmap for achievement. While specific focus areas evolve annually, these elements remain consistent each year: 1. Leadership Commitment 2. Continuous Improvement of the Halliburton Management System (HMS) 3. Training and Competency 4. Communicate and Address Risk 5. Technology and Process Improvement 6. Verify Performance Halliburton Management System 1,276 Halliburton offers 1,276 HSE training courses to our employees. 29 percent Non-productive time rate has been reduced by 29 percent in the last ﬁve years. >100 Halliburton received greater than 100 customer and industry HSE awards. The Code of Business Conduct is set by the Executive Committee and applies globally. Code of Business Conduct COBC Policies Policies are formal statements developed by management. Policies define the intent and conduct of company business. Policies and Business Practices apply to the entire company and are managed by the Law Department. Business Practices Business practices support company policies. They present underlying performance expectations. Global HMS, HSE and Function/PSL Standards Standards further define elements within the system that affect final outputs. The Global HMS Standards and HSE Standards are managed by Global HSE/SQ. PSLs and Support Functions develop Standards, Process Maps and Work Methods to define their work. Process Maps Work Methods Process Maps describe activities, responsibilities and interfaces needed to achieve a given service or product. Work methods describe the detail of a specific work activity, task or business event. 13 9 9 5 , 4 6 1 , 1 6 7 5 , 6 9 4 , 1 9 4 0 , 0 0 8 , 2 9 1 8 , 3 7 5 6 7, 5 8 4 , 6 3 16 17 18 16 17 18 Hours of HSE Training Stop Work Authority The Halliburton Management System governs how we work and supports the execution of our Journey to ZERO. The standards, processes, guidelines and work methods that make up the HMS ensure that our employees and contractors are equipped with the necessary knowledge to work safely, consistently and effectively. All Halliburton contractors and employees are required to conform to the HMS. Our HMS is designed to meet or exceed expectations of regulators, customers and our own internal standards for health, safety and the environment. Our operations are also conducted in conformance with industry standard certiﬁcation programs, including those for quality management (ISO 9001), environmental management (ISO 14001) and health and safety management (OHSAS 18001). A key element of the HMS is the use of Control Points, which serve as the pillars of prevention to avoid HSE and SQ incidents. Control Points simplify our service delivery process by aligning roles and responsibilities so everyone in the organization understands their roles in execution of our service delivery. Simplifying our processes in this way, and verifying execution, drives continuous improvement to our delivery of service and operational efﬁciency. This supports our value proposition to maximize asset value for our customers, while minimizing the environmental and social impacts of our operations. TRAINING AND COMPETENCY All employees are required to complete introductory HSE training to reinforce the Halliburton core principle of safety in all that we do. Additional activity-speciﬁc employee training, administered through our HSE representatives in all regions, ensures that our employees are empowered with the knowledge necessary to execute their jobs safely and responsibly. For specialty job functions, such as radiation safety, speciﬁc training curricula are imbedded in our automated learning management system and linked to individual employees to ensure that mandatory training is delivered and completed as required. Halliburton offers 1,276 HSE training courses to our employees. Our commitment to safety extends to our contractors as well. We require all contractors working at Halliburton sites to conform with Company standards as communicated through our contractual agreements, our “20 Contractor Rules”, site check-ins and safety brieﬁngs. STOP WORK AUTHORITY Our global Stop Work Authority (SWA) program plays a key role in preventing incidents. All employees and contractors have the authority – and the responsibility – to stop a task if they observe an unsafe action or condition at a worksite, or have a concern regarding the control of an HSE or SQ risk. Employees are empowered to use their authority and responsibility to shut down their own work or the work of others anytime they observe an unsafe condition or service delivery issues that would impact service quality, with full support of their team and/or manager. In 2018, we emphasized the importance of the SWA reporting, and enabled our employees to better track and register this information in our HMS. TIERED ASSURANCE PROGRAM Our tiered assurance program is a systematic self-veriﬁcation process that is fundamental to our drive for continuous improvement in HSE/SQ. It consists of a job-site or location assessment, a management system assessment and global 14 Halliburton 2018 Annual & Sustainability Report EARTHSTAR™ ULTRA-DEEP RESISTIVITY SERVICE The EarthStar ultra-deep resistivity service illuminates and maps reservoir and fluid boundaries more than 200 feet (61 meters) from the wellbore. In deepwater and mature fields, this technology helps operators to maximize asset value and plan for future field developments by mapping pockets of hydrocarbons, allowing for real-time steering decisions, and eliminating costly pilot holes and sidetracks. The EarthStar service extends the sensitive range up to 10 times farther from the wellbore than was previously possible. It combines very-deep-reading resistivity measure- ments with azimuthal sensitivity and advanced inversion processing to provide estimates of the position, resistivity, and orientation of formation layers around the wellbore, along with the position of reservoir fluids within them. This information allows for improved evaluation of reserves and more efficient field development. EarthStar applications to maximize asset value are: Geostopping: Reduce well time and cost per barrel of oil equivalent by eliminating costly pilot holes and avoiding drilling hazards. Detect target zones early and land the production lateral in a single drilling run. Drill precisely and confidently to casing points immediately above critical reservoir boundaries, such as over-pressured zones, in order to minimize well-control risks. Geosteering: Drill to produce by positioning the well optimally in the sweet spot to maximize production, avoid unwanted reservoir exits and maximize non-productive intervals. Make well-placement decisions early while drilling, and steer confidently within large and complex wellbore structures. Geomapping: Enhance reservoir understanding by mapping surrounding formation boundaries and estimating the volume of hydrocarbons in place. Identify bypassed pay zones to gain more reserves and facilitate future well planning. In mature fields, improve understanding of fluid movements due to production or water injection. 15 oversight through our Internal Assurance Services. For SQ, managers perform job-related assessments during visits to operational locations, focusing on well sites and workshops. Results are used to assess and verify that the HMS and processes are being implemented in all work locations. In 2018, we assessed our tiered assurance program for opportunities to improve efﬁciency, context and consistency across our system. We will implement program reﬁnements in 2019. INCIDENT INVESTIGATION AND CAUSAL ANALYSIS Rigorous investigation of incidents and our prioritization of incidents in terms of severity and consequence are crucial components of HSE/SQ. We track near misses as a predictive leading indicator, to compile trends on incidents where the potential for harm was present, even though nothing occurred. We classify a near miss as a high-potential incident if the conditions could potentially have resulted in serious personal injury, property damage or adverse environmental impact. Investigation of signiﬁcant incidents through our Signiﬁcant Incident Review process brings immediate visibility to high-risk incidents and enables timely and rigorous assessment to determine root cause. Every Halliburton location has a local emergency response plan. These plans include detailed requirements for emergency response, including evacuation plans and medical response. Halliburton also provides access to medical care for all employees no matter where they are working. TECHNOLOGY AND PROCESS IMPROVEMENT The most effective way to control hazards is to ensure that they are not present to begin with. To accomplish this, we focus on opportunities to improve our product and service design to eliminate hazards, as practicable. Our Manufacturing organization builds the products safely, outperforming the industry average, and our products are designed to have best-in-class safety performance while in use. LIFECYCLE covers all functions within Halliburton and is a critical element in the seamless collaboration of product management, technology and our supply chain. E-CD™ PLUS AUTOMATED CONTINUOUS CIRCULATION SYSTEM The Halliburton e-cd Plus continuous circulation system provides an automated means for performing continuous circulation drillpipe connections while drilling, tripping or running liners. e-cd Plus enhances what was historically a manual process with a system that removes personnel from the red zone area around the drill pipe to increase safety and reduce operator effort, risks and non-productive time, all while maintaining the same design for the e-cd circulating sub and diversion manifold to maintain a 10 year service history of this technology. Efficiency is improved by reducing overall connection time, and the system allows for seamless integration with other equipment and real-time monitoring by means of software and automation. e-cd Plus is particularly valuable in regions or with customers with rig floor red zone limitations for personnel, allowing Halliburton to continue to drive the size of the global market for continuous circulation technology. Trialed in 2017, this technology was first introduced as a partial system on a commercial job in 2018, and the full system in Q1 2019. DATASPHERE® LINX ® SYSTEM The DataSphere LinX behind-casing monitoring system enables permanent monitoring of the well and reservoir without having to drill separate, dedicated monitoring wells. This reduces the emissions and energy spent on drilling dedicated monitoring wells, and lowers the threshold to implement well and reservoir integrity monitoring. The LinX system also significantly reduces the risk of seepage to the seabed on shallow injectors; verifies cap rock integrity, which if compromised can lead to major environmental and financial impacts; and permanently monitors cement integrity to manage sustained casing pressure, which is a well integrity issue worldwide. 16 Halliburton 2018 Annual & Sustainability Report ENHANCED SINGLE-TRIP MULTIPLE ZONE (ESTMZ™) SYSTEM The Enhanced Single-Trip Multizone (ESTMZ) system is a high-rate frac pack system that helps increase completion efficiency by reducing the number of workstring trips to install and treat new or existing wells. It also reduces the completion time between treating individual intervals. By running and completing all intervals in a single workstring trip, along with increased frac-pack completion efficiency, deepwater operators can have a conservative estimated savings of 20+ rig days and $15 million+ dollars in completion installation cost. The system can pump up to 3.75 million pounds of high-strength proppant per well, at maximum pump rates of 45 barrels per minute, which brings higher productivity from each zone. The ESTMZ system can improve bottom-line economics for challenging wells with multi-layered completion intervals by increasing production and reducing installation costs. Halliburton vice president of innovation leads our efforts to build a sustainable network to identify and acquire new technologies from sources outside our industry. We will also explore the potential applicability of our current portfolio of technologies, intellectual property and technical competencies outside traditional oil and gas markets. Halliburton was granted 896 U.S. patents in 2018, an increase of 10 percent over our previous high of 813 in 2017. Patent efficiency also improved, rising to 1.8 U.S. patents per million dollars of research and development investment. Our 2018 research and development spend was $390 million, an increase of 8 percent over 2017 spend ($360 million). Our reported number of patents granted in 2018 includes Halliburton acquisitions, divestitures and filings that were not reflected in public databases at year end. IFI Claims, a database provider of U.S. patent data, has ranked Halliburton as the 39th largest receiver of U.S. grants in 2018 (up from 44th in 2017) and 1st in the oil and gas industry. Total Research and Development Spend (in millions): 2016 $329 2017 $360 2018 $390 R&D Spend as a percent of revenue 2.10% 1.70% 1.60% Patent Efficiency (U.S. patents per $1M of research and development spend) Patents Granted Per Year 1.00 571 1.40 813 1.83 896 17 In 2018, as part of our continuous improvement, we implemented the following initiatives to advance the progress on our Journey to ZERO: OPPORTUNITY We observed an increase in total recordable incidents in 2017 associated with new employees. ACTION We enhanced our New Employee Orientation program to include key focus areas: refreshed Week 1 HSE trainings for all new Halliburton employees; incorporated Petroleum Education Counsel (PEC) requirements into Safety School training for field-level employees; and added a technical week of hands-on, PSL-specific training, including supervisor oversight for field activity for all new field employees. OPPORTUNITY Our training system, Learning Central, was reviewed and modified for course assignment applicability per employee. ACTION We refined global training assignments in the Learning Central to clarify expectations and streamline requirements to ensure employees were assigned the right training for their respective roles. The library of courses was optimized to retire outdated titles resulting in a cleaner, less cluttered library of truly relevant courses. OPPORTUNITY HMS tracks detailed information on root causes of incidents and near misses for specific work activities. ACTION We consolidated our incident reporting system connecting incident reporting and investigations into one digitized global system that will help us transmit key learnings across all our operations. MANAGEMENT OF CHANGE Our Management of Change (MOC) process is designed to control change-related risk when we identify new risks or adjust the operations plan. The process requires that all operational and process changes be planned, reviewed and approved before implementation to reduce the potential for service disruption or the creation of new hazards. Continuous improvement in HMS and execution of our Service Quality Minimums have enabled us to reduce our non-productive time (NPT) rate by 29 percent in the last ﬁve years. HMS also meets and exceeds the requirements of industry-speciﬁc American Petroleum Institute (API) standards for manufacturing and service quality (API Q1 and API Q2), and the API RP 75 standard for offshore safety and environmental management. API Speciﬁcation Q2 Certiﬁcation is a risk-based quality management system approach that focuses on competency, service design, contingency planning, supply chain controls, preventive maintenance, inspection, service quality plans and management of change. Halliburton leads the industry with 38 API Q2-certiﬁed facilities, located in 12 countries. In 2018, UAE, Angola and Canada obtained certiﬁcation, while Oman began the process of certiﬁcation. We strive to achieve our goal of sending every employee home safe and healthy through a consistent focus on the areas of greatest risk inherent to our business and a commitment to continuous improvement across our activities. HSE REPORTING • Established standardized methods of data collection and reporting procedures, communicated throughout all business segments. • Verified that data provided by business segments is accurate, complete and reviewed. Final data underwent executive- level approval. • Assessed results to identify trends and understand drivers of change. 18 Halliburton 2018 Annual & Sustainability Report ONEVIEW™ Digitization is of strategic importance to Halliburton and is transformational in terms of the speed and effectiveness of managing the HSE and SQ information generated by our worldwide operations. We are able to drive far more value from our data through automated workﬂows and processes, which sets the pace for future innovation. We accomplish this through OneView, our integrated HSE and SQ enterprise data management system. By consolidating our legacy systems, we are able to centrally track and monitor data and processes such as: • Incidents and near misses • Stop work authority • Observations • Management of change • Critical well reviews • Risk assessments • Internal and external audits • Regulatory compliance OneView enhances our ongoing commitment to achieve our Journey to ZERO by providing a single, integrated view of HSE and SQ information. It streamlines how we perform key business-critical tasks, improve customer service and provide action-oriented information. Service Quality Our commitment to service quality is an integral part of our culture and of our Journey to ZERO vision. The Service Quality Minimums are the essential elements of how we do our work, and these apply to all operations across all product service lines. They present four key practices that enable us to deliver excellence in execution, through process adherence and continuous improvement. 1. Design of Service – How we plan our work: Our Design of Service (DOS) process deﬁnes the documentation that captures the operational plan and outlines how we will execute to customer requirements. Leadership Commitment 2. Control Points – How we control our work: Control points are deﬁned requirements or activities that provide assurance that the job purpose will be achieved. DOS and MOC are the two control points common to all PSLs. All PSLs consistently deliver and execute their control points as part of each job. Verify Performance HMS Continuous Improvement ZERO Training and Competency Technology and Process Improvement 3. Competency – How we ensure our people have the skills they need: Our global competency program provides the knowledge, skills, behavior and experience that enable our people to do the job. Communicate and Address Risks 4. Incident Investigation – How we improve performance: Through our incident investigation process, all job and non-job-related incidents undergo thorough and timely investigation to identify root causes and prevent incidents from recurring. 19 Driving Safety Work Permit Personal Protection Equipment (PPE) Lock Out/ Tag Out (LOTO) Conﬁned Space Working at Height Chemical Handling Dropped Objects Hand Tools Lifting and Hoisting HALLIBURTON LIFE RULES 10 to ZERO The Halliburton Life Rules go hand-in-hand with our Journey to ZERO. The Halliburton Life Rules are 10 key factors that affect employee safety. Based on our HSE standards, they are a tool to communicate critical requirements to prevent injuries to our employees. The Halliburton Life Rules are used in all our businesses and operations. They apply to every employee and every contractor, in every region and operation. HSE AWARDS In 2018, Halliburton received numerous Health and Safety awards from customers all over the world, recognizing our commitments and contributions to safety. • One million hours LTI-free for the Pipeline & Process Services team in the UAE. • Halliburton has been Green Star certified by the Alaska Forum since 1999, receiving an award for recertification to the program in 2018. The program awards companies that practice waste reduction, energy conservation and pollution prevention. • Halliburton received the “Best Innovation Award” from Total for our Batch Mixer Retrofit Kit and the positive impact it has for personnel safety. • In 2018, Halliburton received customer recognition for demonstrating strong cooperation with the customer’s safety team, with high engagement in reinforcing safety culture, performing at a high level with an unwavering focus on safety and first-class planning and execution. • In August 2018, GTIM HES Fly Camp was recognized for going 500 days without an accident. Health and Safety We are active participants in the development of industry-best HSE management practices, which reﬂect the values of the Halliburton safety culture. In 2019, we will refresh the Halliburton Life Rules to align with the recommendations of the International Association of Oil and Gas Producers. We support industry standardization efforts to improve consistency in the way signiﬁcant hazards and safe work practices are communicated to our employees, our customers and other industry partners. What won’t change is our commitment to minimize environmental impacts, control risks and maintain safe work practices for all Halliburton employees and worksites. Halliburton is committed to the continuous improvement of our processes to ensure that we have the proper focus and are effectively managing change in the workplace. In recognition of this principle, Halliburton will refresh the Critical Focus Areas communications in 2019 to better execute and serve our customers by continuing to achieve best-in-class HSE performance and service delivery. Critical Focus Areas The Critical Focus Areas are those areas that present the biggest risk for the occurrence of HSE, process safety and service quality incidents. When conducting operations involving any Critical Focus Area, extra attention and absolute adherence to our processes are imperative. The Critical Focus Areas are: • Barriers – The physical measures, such as packers, plugs, blowout preventers (BOPs), surface valves, drilling ﬂuids or cement, that prevent gas or oil from ﬂowing into the well from the formation and traveling to the surface. • Hydrocarbons to the Surface – Flow of gas or oil to the surface, such as in well testing or well cleanup operations. • Trapped Pressure – Equipment in which a release of pressure could occur, such as discharge iron, lab machinery, BOPs, cement heads, swages, wellhead pressure control-equipment, pipelines, hoses, tanks or silos. • Well Proximity – The potential for collision with a producing or existing wellbore while drilling. • Radiation and Explosives – Any surface activities involving a radioactive source or explosive material. 20 Halliburton 2018 Annual & Sustainability Report GLOBAL RAPID INTERVENTION PACKAGE (GRIPSM) GRIP is the industry’s fastest response to subsea loss of source control – ready to be deployed anywhere, anytime, in 48 hours. The GRIP not only includes the compact and air-mobile designed Rapid Cap™ plus the air-mobile “Top Hat”, but also the necessary manifolds, a variety of debris removal and cutting tools, and wellhead dispersant connectors. Coupled with Boots & Coots’ industry leading Relief Well Service, the development of the GRIP demonstrates a step change in subsea response by providing the most rapid response possible. GRIP won the 2018 World Oil Awards – Best Health, Safety, Environment/Sustainable Development – Offshore award. 7 3 . 0 7 3 . 0 0 4 . 0 6 6 . 0 0 1 . 0 2 1 . 0 3 1 . 0 0 2 . 0 0 3 . 0 4 3 . 0 8 4 . 0 7 1 1 8 3 . 2 3 9 . 2 3 5 . 2 * * 0 1 2 5 9 1 9 9 1 16 17 18 16 17 18 16 17 18 16 17 18 16 17 18 Fatalities per year ■ Employees ■ Contractors Near-Miss Incident Rate* per 200,000 hours worked 16 17 18 High-Potential Incidents per year Total Recordable Incident Rate per 200,000 hours worked Lost-Time Incident Rate per 200,000 hours worked Recordable Vehicle Incident Rate per 1,000,000 miles traveled ■ 2018 Q3 YTD IADC industry average ■ 2018 Q3 Year to Date (YTD) International Association of Drilling Contractors (IADC) industry average * Near-Miss incident rate does not include Stop Work. ** Updated 2017 information using a consistent calculation method. 21 E-FRAC In response to Halliburton’s shared corporate mission to reduce the industry’s carbon footprint and to be responsible stewards of the environment, Halliburton is testing new initiatives that include electrified pumps. This innovative service directly addresses ecological concerns by significantly reducing emissions and noise pollution. The resulting benefits will empower our customers to improve their ecological footprint easily, efficiently, and cost- effectively, while also enabling us to deliver the same level of service they have come to expect from Halliburton. Environmental Stewardship At Halliburton, our commitment to drive improvement through mitigating the environmental impacts from our operations is integral to our overall strategy. Our vision is to deliver long-term ﬁnancial value by managing risks and opportunities associated with environmental issues, such as climate change, and to have a positive impact on the communities in which we operate, now and for future generations. Central to our strategy is an approach that evaluates the effectiveness of the sustainable environmental practices within our operations, our supply chain and how we partner with our customers to achieve their environmental and social impact goals. Energy and Greenhouse Gases Energy consumption and greenhouse gas (GHG) emissions are major components of our Environmental Stewardship efforts and are material sustainability topics for Halliburton. We strive to mitigate these associated environmental impacts directly through improving the efﬁciency of our own operations. We are also committed to extending our efforts by offering products and services to our customers that enable them to maximize the value of their assets while using less energy and generating fewer emissions. Halliburton is a leader in the deployment of diesel engines that meet the U.S. Environmental Protection Agency Tier 4 standard. We work directly with engine manufacturers and invest in research and development to reduce emissions from the equipment we design, manufacture and use. Today, Halliburton surface equipment is among the cleanest available, and it comprises the largest ﬂeet of Tier 4-compliant diesel engines currently in operation in the U.S. and Gulf of Mexico. 22 Halliburton 2018 Annual & Sustainability Report ILLUSION® SPIRE DISSOLVABLE FRAC PLUG The Illusion Spire plug is the industry’s first fluid-efficient dissolvable frac plug. The Spire plug features a water-saving element that reduces the amount of fluid being pumped per stage, as well as allows operators to pump faster, thus spending less time on location. These efficiencies can materialize into time savings of up to half of a day and fluid savings of several thousand barrels. By virtue of being a dissolvable plug, this technology minimizes or completely eliminates coiled tubing equipment at the rig site. These types of efficiencies work to keep emissions and noise levels to a minimum by reducing the amount of time on location. In addition, the reduction in water usage directly impacts the disposal and transportation burden that is often associated with hydraulic fracturing. Climate Change Climate change is an issue of global signiﬁcance, which has mobilized a societal imperative and call for action. With signiﬁcant potential impacts to both the environment and the social well-being of global populations, our stakeholders, including shareholders, customers and regulators have expressed concern. We recognize the importance of evaluating all of the economic, social and environment implications of climate change. We are committed to increasing transparency and participating in the dialogue around climate change in our industry. We believe that this is essential to our vision to create sustainable long-term future value for our stakeholders and our commitment to conduct business “the RED way”, Responsibly, Ethically and Diligently. Short- and long-term priorities • Be involved in the development of effective public policy and regulation that is rational, market-based and efﬁciently addresses climate change priorities. • Continue to seek reduction of the direct and certain indirect GHG emissions from our business operations. • Assist our customers in effective utilization of our portfolio of products and services to help them reduce their GHG emissions in the development of their hydrocarbon resources. • Work with suppliers to reduce the environmental impacts throughout our value chain. • Inform our employees on climate change issues and what actions they can take to reduce GHG emissions at and away from work. • Include climate strategy in our internal research and development and product development processes. • Work with research bodies and educational institutions to further the development of sustainable solutions for the oil and gas industry. • Continue to report direct and certain indirect GHG emissions from our business operations through our combined Annual & Sustainability Report and stakeholder requests like CDP. 3 1 1 , 0 6 0 , 2 2 6 6 , 2 8 1 , 2 6 9 4 , 2 8 3 , 1 0 3 1 6 0 1 8 5 16 17 18 16 17 18 Absolute Emissions thousand metric tons CO2e ■ Indirect Emissions ■ Direct Emissions Emissions Intensity metric tons CO2e per million U.S. dollars revenue 6 8 6 5 2 , 0 9 8 6 2 , 6 4 9 6 1 , 16 17 18 Energy Consumption thousand GJ ■ Electricity ■ Fuel 23 THE BARAOMNI™ HYBRID SEPARATION SYSTEM New hybrid separation technology treats multiple waste streams with a single, compact system to reduce costs and environmental impact. The Halliburton BaraOmni hybrid separation system combines advanced solids control with waste treatment capabilities to improve operational and environmental performances. The treatment, handling, and transport of oil-contaminated drill cuttings, centrifuge underflow and other waste streams can have a major impact on customer approvals for expenditure and risk exposure. The effective separation of hydrocarbons from drill cuttings can help to significantly reduce disposal volumes sent to landfill and the potential environmental impact of remaining wastes while enabling the recovery or reuse of fluids. Hybrid separation technology consumes 42 percent less energy than conventional thermal treatment methodologies. Alternative systems capable of delivering dry, separated solids are often too complex and cost prohibitive for many land operations and cannot effectively process drilling fluids. Hybrid separation uses low heat in a high-vacuum environment to produce pre-mix quality drilling fluids and dry separated solids, while recovering up to 99.5 percent of the fluid. When processing drilling fluids or drill cuttings, the residual oil content in the separated solids is less than 1 percent total petroleum hydrocarbon. The application of a vacuum reduces the boiling point required to volatilize the liquid components, resulting in lower energy consumption and output fluids with no thermal degradation. The technology can be used at the rig site, waste pit or centralized facility to recover valuable base fluids and reduce disposal volumes. Hybrid separation technology expands current industry capabilities and reduces the operational footprint of traditional solids control and waste management equipment setups. As a result, operators can minimize waste transportation, offsite treatment and storage to reduce environmental exposure and total cost of ownership. The BaraOmni hybrid separation system was the 2018 winner of the “Best Health, Safety, Environment / Sustainable Development- Onshore” World Oil Award. 4 7 1 , 1 4 2 9 , 1 6 4 6 , 2 0 7 8 , 3 7 3 3 1 3 , 0 6 1 7 4 4 , 9 0 2 16 17 18 16 17 18 Water Consumption thousand m3 Waste metric tonnes ■ Non-Hazardous Waste ■ Hazardous Waste WATER Halliburton recognizes that water is one of the world’s most valuable resources, and we have been applying our experience and technologies to water management challenges for nearly a century. Many of our locations are implementing water-reduction projects such as: heating, ventilating and air-conditioning system optimization; and recycling or reusing water used for process cooling, vehicle washing, chemical blending and landscape irrigation. We are committed to helping our customers reduce the volume of fresh water utilized in hydraulic fracturing operations. We have developed new chemistries and separation technologies that enable the recycling of ﬂowback water to be used in a wide range of geographies, replacing fresh water that would typically be used in these operations. WASTE MANAGEMENT At Halliburton, we actively work to minimize waste. Our facilities have waste minimization and management plants, which meet and generally exceed local regulations, where required. Waste minimization, in all forms, is fundamental to our LIFECYCLE process used for the development of products and services. We also audit waste service providers to ensure appropriate waste treatment and disposal. As a result of reductions in the volume, type and complexity of hazardous waste streams, we were able to eliminate the need to operate and maintain a Part B Hazardous Waste Treatment, Storage and Disposal Facility (TSDF) for the ﬁrst time since 2001. The combination of our waste reduction and reuse efforts, as well as streamlined transportation and handling, resulted in avoided costs of over $5 million, per annum. 24 Halliburton 2018 Annual & Sustainability Report EQUIFLOW® AUTONOMOUS INFLOW CONTROL DEVICE (AICD) The EquiFlow autonomous inflow control device is a simple device that addresses unwanted water or gas production. The restriction of unwanted fluid stimulates oil flow in adjacent compartments, thereby increasing oil production. EquiFlow AICD has no moving parts, no elastomeric seals, no communication to surface and absolutely no need to intervene for the life of the completion. The device can impact the economics of many open hole completions globally by reducing the cost of water/gas treatment and disposal at the surface. The AICD improves completion reliability and efficiency by smoothing production throughout the interval, reduces disposal cost and potential environmental impacts and increases ultimate oil recovery. Chemical Stewardship Chemical stewardship plays a key role at Halliburton in our overall commitment to sustainability and the responsible management of the HSE components of the products and services that we provide to our customers worldwide. We believe that to be a sustainable service provider, Halliburton should adhere to ﬁve basic chemical stewardship principles: 1. Accountability and Leadership 2. Stakeholder Communication and Engagement 3. Risk Management 4. Continuous Improvement 5. Chemical Stewardship Management System Halliburton is recognized as an industry leader for the digitization of our Safety Data Sheet (SDS) data and integration into our Chemical Stewardship Management System. By transforming how our product chemical data is managed, we are able to drive far more value to our operations and customers through the use of automated regulatory tracking alerts, integration into chemical import and export clearance and proactive impact analysis to support sustainable market development. Our chemical stewardship principles ensure that the purchase, use, distribution and development of chemical products are accomplished in a manner that promotes social responsibility, safety and sustainability throughout their lifecycle. • Our Chemistry Scoring Index (CSI) is a risk assessment process that compares the relative risks associated with the use of Halliburton chemical products in oil and gas operations. Using the CSI, our customers can compare Halliburton chemical products within the same class of use and application, enabling them to choose those products that optimize performance and minimize potential HSE risks. • All Halliburton chemical products are backed by SDSs, which comply with the latest regulatory requirements, including the Globally Harmonized System of Classiﬁcation and Labeling (GHS). Approximately 121,000 SDS and labels in 37 languages are available through our website. • We have made detailed information regarding our fracturing ﬂuid composition and breakdown available on the Halliburton website. We have also proactively developed processes to provide our customers with the chemical constituents of our hydraulic fracturing ﬂuids to assure compliance with state laws as well as voluntary standards established by the Chemical Disclosure Registry, FracFocus. 8 0 2 2 4 1 4 3 0 , 1 8 . 2 5 5 $ 5 . 6 4 $ 5 . 8 3 $ 16 17 18 16 17 18 Total Volume of Spills cubic meters HSE Fines and Penalties U.S. $1,000 ■ 700 cubic meters attributable to a single fire- suppression system water leak 4 0 0 . 4 0 0 . 5 0 0 . 16 17 18 Recordable Environmental Incident Rate per 200,000 hours worked 25 26 Halliburton 2018 Annual & Sustainability Report CORPORATE GOVERNANCE, BUSINESS ETHICS & STAKEHOLDER ENGAGEMENT Our Guiding Principles for Sustainability are built on a foundation of ethics and integrity. The Company acts on our commitment to ethical behavior through the oversight provided by our Board, our Code of Business Conduct (COBC), our employment practices and our internal assurance function. Our internal assurance function is managed by an executive leader who reports directly to the Audit Committee of the Board. Corporate Governance Board Oversight and Committees Halliburton Corporate Governance Guidelines are reviewed annually and serve as a guidepost for the Board. Topics pertaining to corporate citizenship, governance and sustainability are routinely reviewed at meetings of the Board and its committees. The Board provides the final review of the Annual & Sustainability Report prior to publication. BOARD COMPOSITION AND DIVERSITY The Halliburton Board provides comprehensive oversight of the management and governance of the Company. During most of 2018, our Board had more than 10 members. All directors stand for election at our annual meeting of shareholders, and, except for the Chairman of the Board and Chief Executive Officer, all directors are independent as defined by the New York Stock Exchange. The Board has also designated one of its senior independent members to act as Lead Director. The Board’s Nominating and Corporate Governance Committee performs the annual evaluation of Company director criteria, Board diversity profiles, skills and experience. This committee also performs assessments of the Board, committees and individual directors, considers recommendations from shareholders and directors, and proposes directors for the Company’s annual Board elections. Board members, our manage- ment or a third-party executive search firm identify suitable director candidates. The qualifications for Board candidates are detailed in our 2019 proxy statement. For additional detail on our Board composition and Committees, please refer to the Halliburton Governance and Investor pages of the Halliburton website, as well as the 2019 proxy statement. COMMUNICATION WITH THE BOARD OF DIRECTORS Our management and Board encourages transparent and open communication with shareholders, employees and all interested parties. 27 58 Halliburton has 58 Local Ethics Ofﬁcers (LEOs) across 42 countries who serve as a local link for employees to Global Ethics and Compliance. 40,834 A total of 40,834 Halliburton employees received Code of Business Conduct training in 2018. 18 Halliburton executives presented at 18 industry events last year, including Barclays CEO Energy Conference in New York City, and an HSE Panel at the Society of Petroleum Engineers meeting in Abu Dhabi. BOARD OF DIRECTORS Abdulaziz F. Al Khayyal 3 4 Retired Senior Vice President of Industrial Relations, Saudi Aramco William E. Albrecht 2 3 Non-Executive Chairman of the Board of California Resources Corporation M. Katherine Banks Vice Chancellor of Engineering and National Laboratories, The Texas A&M University System and Dean of Engineering at Texas A&M University Alan M. Bennett 1 4 Retired President and Chief Executive Ofﬁcer, H&R Block, Inc. James R. Boyd 1 2 Retired Chairman of the Board, Arch Coal, Inc. Milton Carroll 2 4 Executive Chairman of the Board, CenterPoint Energy, Inc. Board of Directors’ committees: 1 Audit Committee 2 Compensation Committee 3 HSE Committee 4 Nominating and Corporate Governance Committee Nance K. Dicciani 1 3 Non-Executive Chair of the Board of AgroFresh Solutions, Inc. Murry S. Gerber 1 2 Retired Executive Chairman of the Board, EQT Corporation Patricia Hemingway Hall Retired President and Chief Executive Ofﬁcer of Health Care Service Corporation Robert A. Malone 2 4 Executive Chairman, President and Chief Executive Ofﬁcer, First Sonora Bancshares, Inc. Jeffrey A. Miller Chairman of the Board, President and Chief Executive Ofﬁcer, Halliburton Company Shareholder Engagement We contacted 30 of our largest stockholders, representing more than 52 percent of our outstanding common stock to obtain their views on our executive program, compensation and ESG matters. We met with stockholders, representing approximately 31 percent of our outstanding common stock. HSE AND SUSTAINABLE DEVELOPMENT COMMITTEE The HSE and Sustainable Development (SD) Committee is charged with oversight of HSE and SD matters – including annual strategies, HSE performance and the HSE audit program – and is accountable to the Board HSE Committee. The Company’s executive vice president for Global Business Lines is chief HSE officer and chair of the HSE and SD Committee, and reports at each meeting of the Board HSE Committee. The Committee examines significant HSE incidents, with particular attention given to potential violations of laws or regulations, or of the Halliburton COBC. The committee may request further information or call on individuals involved to provide additional detail and may recommend follow-up actions. COMPENSATION AND REMUNERATION The Compensation Committee of the Board oversees the Halliburton executive compensation program. This program features market-driven compensation within a total-compensation framework, with flexibility to accommodate differences in business drivers and objectives throughout our business units. Our executive compensation includes a base salary, a balanced mix of long- and short-term incentives, supplemental discretionary retirement and benefits. The program is regularly reviewed to ensure that it supports the Company’s strategies and generates value for our shareholders. 28 Halliburton 2018 Annual & Sustainability Report Compensation programs are integrated with our business and human resources strategies and management processes in order to focus efforts, maximize returns and build shareholder value. We partner with consultants to benchmark our pay programs and ensure we offer a competitive remuneration package and maintain governance to ensure consistency and compliance. Halliburton maintains open communication with the investment community, and seeking feedback from our shareholders on a regular basis is a critical part of our approach to managing our executive compensation program. During 2018, members of our senior management team participated in over 100 investor meetings and 18 conferences. This cadence of stockholder engagement is in addition to the input we receive through our annual advisory vote on executive compensation (say-on-pay) and targeted outreach efforts. Additional detail on remuneration policies is available in our 2019 proxy statement. Benefit Plans All active U.S.-based employees are eligible to participate in the Halliburton Retirement and Savings Plan. The Company matches up to 5 percent of income contributed to an employee’s account, for a contribution of $97 million in 2018. Employees can elect to make pre-tax deferrals, Roth contributions or a combination of both. At the end of every plan year, participants that are not contributing at least 6 percent are re-enrolled at 6 percent to help them maximize their matching contributions. Additionally, the Company will determine each year, at its discretion whether to make the Halliburton Basic Contribution; this is an additional discretionary contribution to the retirement accounts of all eligible employees. In 2018, an additional discretionary contribution of $32 million was made, for a total contribution of $129 million. Halliburton maintains five legacy U.S. defined benefit pension plans that have been closed to new entrants and benefit increases since the late 1990s. The assets for these defined benefit programs are managed in a Master Trust. Business Ethics Global Ethics and Compliance The Global Ethics and Compliance practice group in the Law Department is responsible for advancing the Company’s commitment to its core value of Integrity through the administration of its Global Compliance Program. Global Ethics and Compliance is responsible for acting as an impartial and objective resource for all compliance- related issues. The Global Ethics and Compliance practice group is comprised of six subject matter areas that operate jointly and separately to support ethical business conduct by directors, officers, employees, contractors, suppliers, agents, consultants and others acting on the Company’s behalf. Global Ethics and Compliance is structured into global and regional teams. This structure enables us to provide optimal support at every level of the organization. A regional compliance counsel is available for guidance and advice for each region. Global resources are available to advise on issues that affect the Company globally and to conduct investigations regarding potential violations of the COBC or the law. LOCAL ETHICS OFFICER (LEO) PROGRAM NA 12 LA 11 58 EESSA 16 MENA/ APAC 19 LEOs serve as a local link for employees to Global Ethics and Compliance, and are the Company’s ethics role models and compliance champions. • A new class of LEOs began their three-year term in Q4 2017. • 58 Company leaders were drawn from across PSLs and Support Functions and sit in 42 different countries. They were nominated by regional vice presidents and hemisphere presidents. 29 Our COBC requires employees, directors, officers and all third parties that conduct business with us or on our behalf, to act with fairness, integrity and high standards of personal and business ethics. Everyone is accountable for upholding the COBC and for reporting potential violations of the COBC or the law. The COBC is accessible on the internal and external Halliburton websites. 1 0 5 , 5 9 6 5 , 3 5 3 4 , 1 1 7 1 6 , 3 7 6 2 , 2 4 7 8 , 1 9 4 8 , 8 8 5 4 , 3 Latin America Middle East, North Africa and Asia Pacific Eurasia, Europe & Sub-Saharan Africa North America Ethics Training by Region ■ Ethics Tips ■ Ethics Moments LEOs have conducted training in 50 countries in 2018. Global Ethics and Compliance operates under the direction of the Senior Vice President, Deputy General Counsel and Chief Ethics & Compliance Officer (CECO), who independently reports directly to the Audit Committee of the Board and the Executive Vice President, Secretary and General Counsel (GC). To maintain the objectivity and impartiality of Global Ethics and Compliance, the CECO has express authority to communicate directly with the Audit Committee of the Board regarding the implementation and effectiveness of the Global Compliance Program, as well as any matter which may materially impact the Company’s financial statements or may involve activity that deviates from the Company’s core value of Integrity or its commitment to ethical business conduct. Our Global Compliance Program is based on: a robust compliance governance framework; well-defined and clearly communicated standards of compliance; continuous compliance monitoring through internal assessments and audits; effective and timely response to detected violations of the COBC or the law, including disciplinary actions and remedial actions when appropriate; ensuring open lines of communication; ongoing training and education; and proactive risk management. Compliance Management Our Global Compliance Program is structured to detect any violation of the COBC or the law. We provide employees and third parties clear avenues for reporting potential violations of the COBC or the law. The Company’s Ethics Helpline enables Halliburton employees and external whistleblowers to report misconduct anywhere in the world, 24 hours a day, seven days a week, by phone or email. Reports can be submitted anonymously and translators are available. The Company will make every effort to maintain the confidentiality of the reports. Global Ethics and Compliance investigate potential violations of the COBC and share results internally with executive management, Internal Assurance Services (IAS) and, as appropriate, the Audit Committee of the Board. The Chief Ethics & Compliance Officer reports to the Audit Committee of the Board on investigations, COBC audits and other COBC-related topics each quarter, and provides the Audit Committee with a comprehensive annual report. 30 Halliburton 2018 Annual & Sustainability Report Halliburton systematically pursues the goal of minimizing compliance risks, and it analyzes and assesses the compliance risks of all its business units every year though internal audits and compliance risk assessments. Compliance assessments are based on centrally compiled information, interviews and consider specific geographical risks. The results of the analyses form the basis of our programmatic initiatives each year. Global Ethics and Compliance may communicate directly with any Company employee, contractor, supplier, agent, consultant or others acting on the Company’s behalf to conduct a compliance assessment or investigation. Global Ethics and Compliance may work with external parties to enhance the quality and effectiveness of the Global Compliance Program, to conduct investigations, or to review any matter at the request of the General Counsel, the Board, the committees to which Global Ethics and Compliance reports, any member of Executive Committee or any matter referred to it through any reporting channel. Our General Counsel or his designee chairs the Halliburton Enterprise Risk Management (ERM) steering committee. The ERM Steering Committee includes the Director of Risk Management, Senior Director of IAS, and the CECO. The CEO is the Company’s Chief Risk Officer. The ERM steering committee has direct reporting responsibility to the Board’s Audit Committee. Our Board’s Audit and HSE Committees and HSE and SD Executive Committee consider these risks, at minimum, as part of their quarterly meetings. Internal Assurance Services Global Ethics and Compliance partners with Internal Assurance Services (IAS), the Risk Management team and other Company departments to conduct risk assessments of our operations and identify areas where additional attention or modiﬁcation to our programs may be required. The scope and frequency of IAS audits is determined based on our risk assessments as well as local operating company requirements and local conditions. Generally, IAS audits country operations on a three-year cycle for our higher-risk companies, or a ﬁve-year cycle for our lower-risk companies, with more frequent testing and monitoring of select areas of our businesses conducted as necessary. The internal audit is an integral part of our governance of HSE and SQ, and of ﬁnancial controls. Audit out- comes are ﬁnalized in a formal report, and actions are required to address reported audit observations. Audit ﬁndings, trends and insights are reported within the organization and to Board committees as applicable. Our Company has improvement programs and projects that ensure we remain current with changes in both the business environment and with the demands and expectations of our diverse stakeholders. We also have comprehensive policies, procedures and required training that help employees be aware of and comply with applicable laws and regulations, including the U.S. Foreign Corrupt Practices Act (FCPA) and the U.K. Bribery Act. 669 In 2018, Global Ethics and Compliance received 669 reports. 359 reports were sent directly to Global Ethics and Compliance 310 reports were received through the Ethics Helpline 33 percent of the 669 reports were anonymous 175 reports dealt with potential violations of the COBC 163 of 175 cases were closed 359 310 33 175 163 With regard to substantiated reports, appropriate measures are decided in line with the principles of proportionality and fairness. Measures taken included termination, written reprimand, coaching, restitution, suspension without pay, loss of stock/bonus and demotion. 31 Human Rights Halliburton operates in more than 80 countries around the world. Our stockholders, customers, suppliers and employees represent virtually every race, nationality, religion, culture, political philosophy and language. This diversity supports our business excellence and embodies the Company’s respect for human rights and dignity of all people. Halliburton and its Board support universal human rights as deﬁned by the United Nations Universal Declaration of Human Rights. We are committed to compliance with the requirements of all applicable employment, labor and human rights laws. Our IAS and Human Resources processes validate our human rights practices. In 2018, we developed a Human Rights Policy Statement, which is available under the Corporate Governance section of the Halliburton website. Taxation The Halliburton taxation strategy is consistent with our commitment to integrity and ethics, and with our Guiding Principle on Global Citizenship. We are committed to meeting our legal obligations in the payment of taxes and the disclosure of taxes paid and effective rates. This information is set out in the notes to our financial statements. Public Policy and Political Contributions Halliburton may engage in public policy issues relevant to the Company’s interests. The Company’s corporate political activities, including any contributions of Halliburton funds or use of Company facilities and resources, must comply with applicable laws. There are also times when Halliburton may provide administrative support for the operation of political action committees or provide support in informing the public on an issue of importance to the Company and its shareholders. In these cases, contributions will always be in compliance with federal, state and local laws. Further information on the Company’s contributions and public policy engagement can be found on the Halliburton website. Stakeholder Engagement At Halliburton, we have an ongoing dialogue with our shareholders, customers, suppliers, communities, employees and partners about our business performance and role in society, at all levels of our organization. This collaboration is integral to our ability to deliver long-term financial, environmental and social value to our stake- holders. We regularly gather feedback on our activities and monitor issues important to our stakeholders on a local and global level. GLOBAL ETHICS AND COMPLIANCE TRAINING COBC Training All Halliburton employees and certain categories of contract workers or consultants are required to complete COBC training every two years. Two training courses are available online and cover all areas of the COBC, including anti-corruption and human rights. The content of the courses is tailored for manager versus non-manager employees. Global Ethics and Compliance conducts in-person training sessions to supplement the web-based COBC training courses. These include interactive case scenario workshops. A total of approximately 41,000 employees received COBC training in 2018. Anti-Corruption Training All employees with relevant job functions and those working in high-risk countries complete anti-bribery and anti-corruption training. The training covers the U.S. Foreign Corrupt Practices Act, U.K. Bribery Act, other country-specific anti-corruption laws, hospitality, charitable contributions, donations, gifts and international business relationships. Global Ethics and Compliance conducts in-person training sessions to supplement the web-based anti-corruption training courses. These include interactive, case-scenario workshops. A total of 8,019 employees received Anti-Corruption training in 2018. High-Risk Country Training Employees working in countries that have been designated as high risk are required to take training which, in addition to touchpoints on COBC and anti-corruption, focuses on internal controls that must be followed in the procurement process. A total of 1,408 employees received High-Risk Country training in 2018. 32 Halliburton 2018 Annual & Sustainability Report Trade Associations and Speaking Engagements: Halliburton engages with the industry and with technology leaders to forge relationships that promote the advancement of science and technology. Senior management, our Investor Relations team and operational managers hold regular meetings and conference calls with analysts, institutional investors and others. In 2018, Halliburton executives made presentations, participated in panels or had other key roles at various industry events. At Halliburton, we believe that clean natural gas is a sound alternative to other sources of energy, and hydraulic fracturing is the technology that will make this abundant natural resource more available as an alternative source of energy. We frequently engage the public, trade associations and government agencies (U.S. Environmental Protection Agency, U.S. state agencies, etc.) around the issue of hydraulic fracturing. Halliburton engagement also includes participation in technical roundtables, technical peer-reviewed publications, contributions to informational websites and disclosures to customers, investors and the general public through our website. Halliburton works with government officials to provide in-depth information on our operations, examine emerging technologies and contribute to the discussion of regulatory standards. For example, Company representatives have been involved in the policy discussions surrounding the development of shale oil and gas resources in the U.S., Canada, Mexico, Europe and Australia. The Halliburton Government Affairs function contributes to that objective by interfacing directly with a broad array of government and non-government entities. We seek to influence the development of laws, regulations and policies that foster sound national and global economies. The office is focused on federal issues, key states where we operate and international markets of consequence. We are also educating policy makers on our technology, products and services that result in lower emissions from our business activities and those services we provide at the customer’s well site. 33 34 Halliburton 2018 Annual & Sustainability Report SUPPLY CHAIN As the largest support function within Halliburton, Supply Chain manages a complex, global network of suppliers, warehouses, cross docks and manufacturing facilities. Comprised of procurement, manufacturing, materials and logistics, the global Supply Chain function is responsible for over 20 manufacturing centers spanning the globe, and has team members working in nearly every country where the Company operates. Halliburton maintains the highest standards of corporate citizenship throughout our global operations and requires the same from our suppliers. We strive to maximize the positive economic and social impacts of our value chain, while minimizing environ- mental impacts. Halliburton engages local and diverse suppliers in the counties where we operate, which not only exemplifies good corporate citizenship, but is also good business as it increases the strength and resiliency of our supply chain. Supply Chain Governance Halliburton is committed to compliance with the requirements of all applicable employment, labor and human rights laws to ensure fair and ethical employment practices. This includes our non-discrimination, minimum age, freedom of association and fair compensation policies as well as our policies on health, safety and security for our employees. As part of the Company’s commitment, our requirements set forth the expectation that our suppliers will uphold the fundamental rights of their employees as stated in the Universal Declaration of Human Rights expressed by the United Nations. During on-boarding, Halliburton requires 100 percent of potential suppliers to undergo a risk-evaluation process that covers export controls and sanctions screening, insurance veriﬁcations and safety training for onsite vendors. Due diligence checks are also performed on all international non-commercial agents, such as customs brokers, freight forwarders and immigration and visa agents. Critical suppliers are evaluated annually on risks related to safety, quality, environment, social responsibility, economics, governance and corporate citizenship. Non-compliance with Halliburton standards, such as poor performance, unethical business practices and acts of corruption can lead to appropriate response actions up to and including termination. Training on topics including HSE standards, human rights and conflict mineral compliance is also provided to our suppliers to ensure they meet the Company’s standards and gain information to improve the communities where we live and work. Suppliers are required to supply Democratic Republic of Congo (DRC) conflict-free materials to Halliburton, furnish information to assist in determining that work provided to Halliburton is DRC conflict-free and respond to requests for information on sources of supply. These requirements support our commitment to the Responsible Minerals Initiative and our compliance with Section 1502 of the United States Dodd-Frank Act. In 2018, a total of 1,552 suppliers were identified as in-scope and contacted as part of the Conflict Minerals campaign. Halliburton removed suppliers from our approved supplier base who did not cooperate with our Dodd-Frank compliance requirements. 35 >80 percent Greater than 80 percent of the Company’s Procurement spend was with local suppliers. 1,552 As part of our Conﬂict Minerals campaign, Halliburton reviewed 1,552 suppliers to conﬁrm compliance with Dodd-Frank requirements. 100 percent During on-boarding, Halliburton requires 100 percent of potential suppliers to undergo a risk-evaluation process. Local Content and Supplier Diversity In 2018, more than 80 percent of the Company’s procurement spend was with suppliers located within the region where our operational activity took place. We establish and foster relationships with suppliers who can provide Halliburton with strategic and competitive advantages for our local operations, while expanding the capacity and competency of national and local industry suppliers. Halliburton shapes local sourcing efforts to the speciﬁc governmental, cultural and economic needs of each country. Additionally, Halliburton supports small, minority-owned and women-owned businesses throughout our U.S. supply chain. 36 Halliburton 2018 Annual & Sustainability Report Ecuador Mexico Saudi Arabia Halliburton reached 98 percent local content suppliers for our drilling services in Ecuador though ongoing negotiations with international and local vendors. The initiative was part of a project drilling campaign with our customer to increase oil production, improve cost structure and consolidate long-term business relations with local suppliers. Through this strategy, Halliburton increased its competitive advantage in Ecuador and obtained high HSE and SQ performance from suppliers with zero significant events. Halliburton Supply Chain conducted a workshop where 70 percent of Mexico’s local critical vendors participated to increase alignment with the Company’s HSE and SQ performance expectations for the year. The workshop included participation from Halliburton PSL management to provide clear insights on performance expectations required on customer well sites. As a result, Halliburton realized an increase in overall supplier performance. Halliburton developed a local manufacturing supplier for the Tuned® Defense™ cement spacer to support Saudi Aramco’s in-Kingdom Total Value Add (IKTVA) Program. This supplier will supply the Tuned® Defense™ cement spacer to Saudi Arabia and an additional 50 countries spanning the Eastern Hemisphere and Latin America Region operations. China India Nigeria Halliburton worked with suppliers in China to develop local capabilities and capacity by delivering quarterly trainings to key suppliers. The training covered technical drawings and specifications, metrology, review of mechanical properties, premium thread connections, coating and plating operations. The success of the program enabled Halliburton to direct nearly 50 percent more manufacturing activity to our Chinese suppliers. Halliburton Manufacturing and Technology, in conjunction with our local pressure pumping supplier, launched an exercise to design and develop enhancements for our critical high-pressure pumping equipment. This joint effort will not only result in improved equipment performance, but also it strengthened our relationship with this supplier. To support our efforts to empower the local community, Halliburton established a training and development program on project management, well intervention, drilling fluid, well testing and pumping and cementing services. In 2018, Halliburton successfully graduated 19 candidates from this program, and as a result, Halliburton increased our local capacity in Nigeria, which supports our local content efforts. 37 38 Halliburton 2018 Annual & Sustainability Report HALLIBURTON COMMUNITY Community Engagement Community engagement incorporates many aspects of our interactions with our external stakeholders. Two of our Guiding Principles for Sustainability are Global Citizenship and Collaboration, and these provide the framework for our engagement with the community through volunteer efforts, philanthropy and partnerships. Halliburton centers our community work on our four Pillars of Giving: education, environment, health and safety and social service. 1 Education Each year, the Halliburton Foundation makes donations to U.S.-based elementary and secondary schools, colleges and universities through the University Advisory Board (UAB). We look at a variety of programs that demonstrate excellence in preparing students with advanced skills for the oil and gas industry, considering things such as opportunity for increased diversity within the STEM discipline, global perspective and creativity. Halliburton best leverages Foundation grant awards through such programs that encourage youth to pursue STEM studies, boost retention in technical disciplines and develop technical, business or leadership skills. At its discretion, the Foundation board of trustees also provides a limited number of grants to health and health-related charities. Halliburton reviews grant requests on a quarterly basis. 2 Environment In 2018, Trees for Houston (a non-profit organization) was a recipient of money raised from the Halliburton Charity Golf Tournament. Trees for Houston also provided volunteers with 22 trees as part of its Trees for Schools program. Halliburton employees from the Applied Sciences teams in Cementing and Production Enhancement completed a community project with a North Houston elementary school, planting the crape myrtle and Monterrey oak trees around the school’s grounds. 3 Health and Safety To support International Children’s Day, Dhahran-based employees visited King Fahd Specialist Hospital in Saudi Arabia to visit with children undergoing various cancer treatments and to show support for affected families. Employees distributed gifts and created drawings and paintings with the children. “This was a very special activity for us,” said Muzzammil Shakeel, a scientist in the Technology group who organized the outreach. “Halliburton has always played an impactful role in the community, and this initiative is part of our ongoing commitment to the communities where we live and work.” 4 Social Service Halliburton employees in Duncan, Oklahoma, held a second annual Red Games. The Red Games are a series of wellness challenges in which our employees compete against one another. On behalf of the winning team, the Halliburton Charitable Foundation donated $10,000 to Gabriel’s House Academy, an organization that partners with local schools to provide a safe, affordable, and nurturing after-school environment for at-risk children of primary school age. 39 $1,976,368,090 Halliburton made almost $2 billion in contributions through our Charitable Giving programs. 100 percent All Halliburton employees have access to career development programs and training through Learning Central. Number 24 Recognized as a Top 50 Employer by Woman Engineer (#24). ▼ * S E I T I HALLIBURTON COMPANY: SUPPORT TO NON-PROFITS GLOBALLY Cash, in-kind (goods and services) and volunteer programs T N E G N V G I I HALLIBURTON CHARITABLE FOUNDATION (ALSO KNOWN AS HALLIBURTON CHARITY GOLF TOURNAMENT) Grants from Halliburton Charity Golf Tournament to U.S.-based non-profits encompassing the four Pillars of Giving in areas where Halliburton facilities are located HALLIBURTON FOUNDATION UAB GRANT MATCHING GIFT PROGRAM DIRECT GRANTS ▼ S R A L L I P ▼ Y G E T A R T S G N V G I I Education STEM, literacy, business Health and Safety Disease-related causes, hospital foundations, police, EMS, first responders, community health and safety Environment Sustainability, clean-ups Social Services Overall well-being of the communities where we live and work, veterans, hunger OVERALL GIVING STRATEGY Time, Treasure, Talent * All three granting entities (Halliburton, Halliburton Foundation, Halliburton Charitable Foundation) are independent entities with separate oversight, bylaws and leadership. GIVING CHOICES Every October, employees in the U.S., Canada, Mexico, the U.K., Australia, New Zealand, India, Indonesia, Singapore, Malaysia, Pakistan, Kuwait, Iraq, Oman, Egypt, UAE and Qatar proudly pledge money to their charities of choice through our annual workplace giving program, Giving Choices. In addition to providing a 10 percent matching gift, Halliburton also absorbs any administrative fees to support the campaign. During our October 2018 Giving Choices campaign, employees pledged more than $900,000 to non-proﬁts globally. ENERGY TO HELP Our employees have a strong desire to help others, and we are proud to support their philanthropy and volunteer efforts globally. Halliburton employees around the world have consistently demonstrated the “Energy to Help™” by volunteering to organize fundraisers for disease research, to assist children and the elderly, to participate in environmental improvement projects and to support hundreds of other community initiatives. 2018 Charitable Giving The U.S.-based Halliburton Foundation supports education at all levels and charitable organizations through employee matching gifts and direct grants. We welcome suggestions from all employees on community and philanthropic efforts. Halliburton Community Relations regularly reviews community initiatives to ensure alignment with the Foundation’s focus areas and the Company’s broader strategy. HALLIBURTON CHARIT Y GOLF TOURNAMENT Charity Partners tied with Employee Resource Groups (ERGs) benefitted from Golf Tournament • Girls Inc. • Montrose Counselling Center • Impact A Hero 40 Halliburton 2018 Annual & Sustainability Report Halliburton Workforce Diversity and Inclusion Diversity in our workplace broadens thinking, stimulates innovation and generates unique solutions to the world’s energy challenges. A more diverse workplace impacts how we act, what we do and opens our minds to be more creative, collaborative and competitive. Halliburton creates a positive work environment by maintaining a strong culture of diversity and inclusion, supported by our COBC and formal employment practices. This is reinforced through ongoing campaigns to highlight the value of diverse points of view, and is strengthened by Unconscious Bias Diversity Training for every level of leadership. The results of our efforts are visible in our Employee Resource Groups and in the diversity of our workforce. EMPLOYEE RESOURCE GROUPS Halliburton Employee Resource Groups are created/formed by employees to foster engagement, networking and professional development. They are open to all employees and enable the creation of personal and professional connections across our global workforce. In 2018, we enhanced collaboration among Employee Resource Groups such as Women Sharing Excellence, Halliburton African American Network Forum, Veterans Leadership Forum, iMPACT and PRIDE. Women Sharing Excellence (WSE) is an internal professional network dedicated to promoting employee development, building leadership competencies and increasing employee retention. The organization is open to all Halliburton professionals, and has more than 900 members globally. WSE provides support in career planning and self-development through mentoring, training, community-service events, spotlight recognition and a workplace conversation series. Halliburton African American Network Forum (HAANF) supports the Company’s diverse workforce through networking, mentoring and promoting professional growth, with the mission to educate, motivate and empower its members. Participants engage in community service events and lead career development workshops. Although HAANF members are primarily African-American employees, the organization is open to all employees who seek to cultivate a diverse environment that provides opportunities for advancement, success and growth. Veterans Leadership Forum (VLF) provides tools and opportunities for professional development to members to help maximize their contributions to the Company’s success. Established by and for veterans in 2013, VLF membership is open to all Halliburton employees who seek to enhance their careers. iMPACT is an organization of Halliburton professionals with the primary objective of furthering employee development, enhancing leadership competencies and increasing employee retention. The mission of this organization is to enable retention by engaging early- to mid-career Halliburton professionals in networking and leadership programs that prepare them for growth within the company. PRIDE is dedicated to creating a positive and inclusive work environment for people of all sexual orientations and gender identities. The organization achieves its goal through education, awareness and results that add business value through industry relations. PRIDE membership is open to all Halliburton employees. CHARITABLE GIVING $2,609,606 Halliburton Corporate Giving $4,137,041 Halliburton Foundation >$900,781 Employee Giving (Giving Choices) $1,968,720,662 Landmark In-Kind Donations >$1,976,368,090 Total Contributions EDUCATION AND PARTNERSHIP HIGHLIGHTS Louisiana State University Halliburton sponsors Louisiana State University (LSU) Halliburton Scholar’s Program. Last year, all 16 recipients were female. Texas Tech University Science: It’s A Girl Thing (SIGT): Halliburton assists with program costs that will enable Texas Tech University’s Institute for the Development and Enrichment of Advanced Learners (IDEAL) to provide opportunities to 40 young women from Texas to participate in SIGT at no cost. Pennsylvania State University Halliburton funds diversity retention initiatives for Penn State’s Women in Engineering Program (WEP), specifically the Women in Engineering Program Orientation (WEPO) and WEP Wednesdays. We offer internships to university and technical school students from diverse socio-economic backgrounds, aiming to hire the best after graduation. 2018 UAB PROGRAMS 9 6 1 14 12 2 ■ At-risk Youth into Business, Geoscience and STEM ■ Diversity into Geoscience and STEM ■ Energy focus in Business ■ Gender Diversity into STEM ■ Veterans’ Dependents into STEM ■ Youth Outreach into Geosciences, Industry and STEM 41 Thailand – Cave Rescue United States – Pro Bono Program Brazil and Singapore – iMPACT Donations In June 2018, a group of 12 boys were trapped deep inside a cave in Thailand’s Chiang Rai province, accompanied only by their soccer coach. What began as an innocent cave exploration after practice turned into nine days of the group being marooned on a small rocky shelf nearly four kilometers from the cave entrance. Due to heavy rains, the cave system became flooded. With support from the Company, two Halliburton volunteers flew to Thailand to help set up pumping equipment and install hard piping to help drain water from the flooded cave. The Halliburton volunteers became part of a larger team of international representatives from countries all over the world with the same goal in mind – to bring the boys and their coach to safety as soon as possible. For about a decade, our law department in Houston has had a pro bono program that supports our local communities. This effort is accomplished by partnering with local bar associations and legal aid organizations to provide legal assistance to underserved members of the community. Halliburton attorneys assist with disaster relief response, volunteer at legal advice clinics, participate in will-a-thons, answer legal calls and represent the underserved in pro bono cases. In recognition of its pro bono efforts, in 2018, the Halliburton Law Department received the Award for Outstanding Corporate Law Department Contribution by the Houston Volunteer Lawyers Program (HVLP). The HVLP is a non-profit service of the Houston Bar Association, which provides free civil legal aid to low-income individuals and promotes volunteerism among lawyers. Through iMPACT, Halliburton employees in Brazil made donations and volunteered during special occasions such as Easter and Christmas, at Jacyra School located in an underprivileged area of Macae. They also partnered with a non-profit organization, Casa do Araço, to promote and gather donations for children in need. In Singapore, the iMPACT team held a Hair for Hope event, a fundraiser in which Halliburton employees shave their heads to raise funds for the Children’s Cancer Foundation. The 2018 event saw a record number of participants from the events inception in 2016, raising over $22,000 in 2018. Colombia – Charitable Projects Mexico – Rebuilding Schools India – Sustainability Contribution In 2018, Halliburton employees participated in various charitable projects in the rural areas of our operations in Neiva, Huila. Additionally, the Company donated recycling receptacles and materials for the maintenance of damaged school parks, benefiting about 1,200 people. Halliburton employees have donated food, clothing and time to help to rebuild schools that were severely damaged by an 8.2 earthquake at the end of 2017. This was done in collaboration with United Way Mexico. The reconstruction of three schools has progressed positively and the first school is planned to open in January 2019. Our Pune Technology Center contributed $31,000 to the Deenanath Mangeshkar Hospital in Maharashtra, Pune, India, to help treat and/or perform free surgeries for underprivileged children suffering from cancer, orthopedic deformities or epilepsy. The 2018 contributions help treat 26 patients, out of which 20 were below the age of 6 and 21 were from families below the poverty line. The Halliburton contribution covers 60 percent of the total amount and the remaining 40 percent comes from the Hospital. 42 Halliburton 2018 Annual & Sustainability Report In 2018, we continued targeted partnerships and mindshare with gender speciﬁc and minority organizations and universities. As part of these efforts, we have increased focus and accountability, resulting in the hiring of 23 percent female professionals. In addition, we increased female candidacies for key operational role readiness by 48 percent. EMPLOYEE TRAINING AND DEVELOPMENT Learning in Halliburton follows a federated model, where a global team establishes standards, processes and systems related to learning and development, and the business units have the ﬂexibility to pursue employee development plans within this broad framework. This model gives each business unit the agility to develop curriculum and make learning decisions suited to their circumstances, while also maintaining consistency in processes. Employees have access to a variety of learning and career resources via the Employee Development Hub, including Learning Central and Competency Central. Learning Central manages and tracks over 2,700 courses used by approximately 60,000 employees. HalVL, a virtual training platform, with social collaboration tools, is also extensively used by the business. In 2018, we also saw the introduction of Halliburton TV, a corporate platform for producing, hosting and delivering video content on a variety of topics. These three primary systems are supported by others that facilitate both formal and informal learning opportunities for employees and ensure that employees receive relevant training and development that is aligned to our business needs and service quality framework. Learning Central documents career development activities and Competency Central connects required competencies to job roles. In addition to Learning Central’s online courses, our network of training centers offers employees technical, operational, professional and leadership training in classroom and hands-on workshop settings. Employees can also independently register for training and other development activities. By identifying and addressing gaps in knowledge or skills, they can determine the development necessary to advance to the next career level. Managers assign and assess their employees’ competencies for current roles and next roles of interest. In 2018, the International Association of Drilling Contractors once again granted our Global Competency Assurance Program full accreditation, with full competency accreditation for positions across all PSLs and support functions globally. We remain the only full-spectrum oilﬁeld services company to have global accreditation with no restrictions. Overall training hours increased by 49 percent in 2018 to 4.53 million hours. Increased recruitment in the North America market led to a global average of 68 training hours per learner, up 33 percent from 2017. DIVERSITY AND INCLUSION EVENTS & AWARDS Events • Sponsored and participated with multiple Halliburton speakers in the Society of Women Engineers (SWE) National Conference, Minneapolis, Minnesota, October 2018. • Attended Women’s Global Leadership Conference in Energy – 80 Halliburton attendees, including panelist and keynote speaker. • Sponsored Society of Women Engineers WE Local conference, Pune, India. • Created a Social Media Campaign – Women of Halliburton. • Sponsored 34 female-focused events on campuses across the U.S. • Sponsored the Joint Women’s Leadership Symposium (JWLS). Awards • 2018 Houston Business Journal Women to Watch – Misty Rowe, Cementing Technology Portfolio Manager. • 2018 Pink Petro GRIT Award Winner – Monica Baistrocchi, HSE and SQ Manager, Continental Europe. • 2018 Breakthrough Woman by Greater Houston Women’s Chamber of Commerce – Lisa Modica, Vice President Global Labor and Employment. • 2018 Greater Houston Women’s Chamber of Commerce – Board Chair – Myrtle Jones, Senior Vice President, Tax. Recognitions • Ranked #1 in Rigzone Ideal Employer Oilﬁeld Service Companies Survey. • Recognized as a Top 25 Company for Diversity by National Diversity Council. • Recognized as a Top 50 Employer by Woman Engineer (#24). • Recognized as a Top 50 Employer by Minority Engineer (#27). • Recognized as Experienced Energy Partner by Pink Petro for Diversity and Inclusion hiring. GOVERNANCE MODEL FOR LEARNING AND DEVELOPMENT Sponsor Steering Committee Learning Council Learning Professionals 43 The Company’s learning organization has 134 full-time learning professionals – one per 446 employees. They manage, develop, conduct and administer learning activ- ities. This community has representation in the Learning Council, via the Technical Development Managers, who participate in governance-related decision-making. In addition, the company has a large number of specialized professionals and product champions who support the learning organization in the capacity of guest instructors and subject matter experts. 2018 AVERAGE EMPLOYEE AGE EMPLOYEES: PERCENTAGE OF 2018 FEMALE NEW HIRES BY REGION Western Hemisphere Eastern Hemisphere Other 2018 EMPLOYEE HIRING Total New Hires* New Hires Rate 37.5 38.2 43.8 12,564 0.21 19% 14% * Hires from Completion and Production and Drilling and Evaluation only. We pay over 200 percent of the federal minimum wage in the United States for all entry-level non-exempt employees. 21% 35% 100 percent of our employees receive regular performance and career development conversations. ■ North America ■ Latin America ■ Europe/Africa/CIS ■ Middle East/ Asia Pacific 2 0 . 2 * 4 0 . 3 3 5 . 4 3 3 * 1 5 8 6 EMPLOYEES: PERCENTAGE OF LOCAL NATIONALS IN WORKFORCE 16 17 18 16 17 18 16 17 18 Employee Training million hours Training Hours per Learner hours * Updated 2017 information using a consistent calculation method. 99% 99% 100% North America 93% 98% 94% Latin America Europe/Africa/CIS 88% 93% 93% Middle East/Asia Paciﬁc 72% 75% 70% BUSINESS LEADERSHIP DEVELOPMENT COURSES Number of Attendees Business Leadership Level I Attendees Business Leadership Level II Attendees Business Leadership Level III Attendees Financial Leadership for Non-Financial Leaders President’s Leadership Excellence Program 509 457 292 148 135 219 48 57 75 130 120 40 20 23 30 Year 2016 2017 2018 44 Halliburton 2018 Annual & Sustainability Report TALENT MANAGEMENT Constant and active communication between employees and managers is the core of our annual succession management process. This helps to identify, develop and retain a reliable succession of skilled leaders. A key factor in fostering employee engagement is supporting employees in enhancing professional growth and building their careers with succession planning, leadership development plans and specialized leadership programs to open doors for high-potential employees. Succession management is a proven method for assessing the skills, talent and potential of employees. It targets top talent for accelerated development within the Company through tailored development plans. Succession Management Process Steps 1) Employees complete/update an online Talent Proﬁle Summary. 2) Managers complete Leadership Assessments of their direct reports. 3) Managers populate a Succession Management Replacement Chart prior to Talent Review. 4) Relevant team members hold a Talent Review to discuss their reports’ competencies, strengths, development areas, potential and blocking roles. 5) Managers conduct Development Discussions with reports and create Leadership Development Plans for the coming year. 6) Employees execute their Leadership Development Plans while managers provide ongoing support, coaching and feedback. Ongoing identiﬁcation, assessment and development of our leadership talent strengthens our competitive advantage and is critical to our short-term and long-term success. Career development frameworks that prepare qualiﬁed employees for leadership roles include the Supply Chain Management Program, Technology Professional Development Program, Human Resources Leadership Program, Hire to HSE Manager and the Hire to Country Manager process. Halliburton also offers customized assessment and development opportunities for employees currently in leadership positions. These include stretch assignments, leadership development plans with coaching and training programs developed and facilitated internally and externally. Performance Development Application Opportunities Career Conversations Identify, develop, retain talent for long-term sustainability of leadership bench strength Development Plans Aspirations Assessments 45 HIRE TO COUNTRY MANAGER PROCESS Hire to Country Manager is our leading development process for operational personnel. PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5 Role Technical Professional Role Technical Professional Role Account Representative Competency Technical Depth Competency Service Execution Competency Customer Focus Role Service Coordinator Competency Frontline Leadership PSL Country Manager Role PSL Service Manager Competency Business Acumen Security The safety of our employees, contractors and facilities is paramount, and coincides with our respect for human rights and the security of local communities. Our high standards of safety require the use of third-party armed security in a small minority of the countries where we operate. Halliburton makes signiﬁcant efforts to ensure that these security providers uphold our strong standards of ethics and integrity. All third-party security providers are required to ensure that security personnel complete all necessary training, and to have procedures in place to ensure compliance with our COBC. Employee Well-Being We aim to continuously improve our workplace culture by listening to our employees through frequent engagement on work status and performance, as well as through semi-annual Employee Pulse Surveys. Understanding our employees’ perspectives by aggregating their direct feedback is one way we drive management accountability to listen, learn and communicate with employees for continuous improvement. In an effort to improve the frequency and quality of performance conversations, Halliburton migrated to a continuous performance and engagement approach known as “Check-in” in late 2016. This approach applies to 100 percent of our workforce and ensures more frequent conversations between employees and managers to connect on priorities, communicate feedback and collaborate to develop stronger performance. We drive accountability through our semi-annual Employee Pulse Survey that measures several engagement and leader effectiveness items that directly link to the Check-in process. Our results have improved over time, indicating a higher level of leader effectiveness. By understanding their organizational data, leaders target particular areas to improve. Instead of an annual, one-dimensional rating, Halliburton uses a semi-annual Talent Identiﬁcation Survey which serves as a multi-dimensional snapshot of performance and potential. The Talent Identiﬁcation Survey provides managers with better insights for making effective talent and pay decisions. It measures factors including performance, collaboration and potential. The Talent Identiﬁcation Survey also provides managers with more speciﬁc information that they can communicate with employees during their Check-in conversations. Halliburton uses the data collected from the Employee Pulse Survey and the Talent Identiﬁcation Survey for predictive analytics. We discovered a strong correlation of survey data related to feedback and development with attrition. By identifying where elevated risk exists, HR is able to proactively coach leaders to take speciﬁc steps to improve engagement within these groups in an effort to retain key talent. 100% 75% 50% 25% Q1 2017 Q3 2017 Q1 2018 Q3 2018 Percent of Employees in Agreement with Halliburton Focus Areas ■ How Individual Goals Connect to Halliburton Objectives ■ Clarity of Individual Objectives ■ Frequency of Feedback ■ Frequency of Development Conversations 46 Halliburton 2018 Annual & Sustainability Report In 2018, we built upon our beneﬁts and Family Care program offerings for our U.S. employees. Family Care Program Updates • Dependent Sick Days – Employees may take up to ﬁve paid days a year to care for a sick child, parent or other immediate family member. • Parental Bonding Leave – Both mothers and fathers may take up to eight weeks of paid leave within the ﬁrst year to bond with a newborn or newly adopted child. This is separate from, and in addition to, our existing medical leave beneﬁts associated with a birth. • Total number of employees entitled to parental leave • Male = 20,365 (approximately 2 percent took paid bonding leave in 2018) • Female = 2,810 (approximately 2.6 percent took paid bonding leave in 2018) • Increased Adoption Allowance – Employees who adopt a child are eligible to receive additional ﬁnancial support. • Fertility Treatment Beneﬁt – Employees with fertility issues are eligible to receive additional support in their journey to parenthood. • Family Care Program Point of Contact – Employees will have access to a resource on our beneﬁts team who will help guide them through their family care needs. All regular employees scheduled to work a minimum of 20 hours per week are eligible for all health, welfare and retirement beneﬁts, including retirement consultation and planning, offered by Halliburton. Transition assistance programs are offered through an external provider. LiveWell: Our health and wellness lifestyle management program provides employees and their spouses access to information and tools to help achieve personal health and wellness goals, including tobacco cessation, weight-loss programs and ﬁnancial planning and educational workshops. Halliburton has a global program to ensure the health and well-being of our employees and their families. Our Wellness Committee, under executive sponsorship, has a mission to increase awareness and create opportunities for employees and their families to take ownership of their health. The initiative focuses on ﬁve key elements: (1) Nutrition, (2) Physical health, (3) Emotional health, (4) Financial wellness and (5) Community involvement. Halliburton offers programs that help employees constructively cope with well-being issues that arise within and outside the workplace, including: • The Halliburton Dispute Resolution Program provides independent ombudsman and mediator support for employees to resolve workplace issues. • The Employee Assistance Program offers conﬁdential help and support for a range of personal and professional difﬁculties. 47 ENVIRONMENTAL & SOCIAL DATA ENVIRONMENTAL Energy Consumption (GJ)1 Fuel Consumption2 Diesel Coal Natural Gas Other (Gasoline and Propane) Electricity Consumption Total Greenhouse Gas Emissions (TCO2e)3 Direct (Scope 1) Indirect (Scope 2) Indirect (Scope 3)4 Total Greenhouse Gas Emissions Intensity (TCO2e/$M Revenue) Scope 1, 2 and 3 Waste Disposal (Metric Tonnes) Non-hazardous Hazardous Total Incineration Total Landﬁll Total Recycled Total Reuse Composting Total Energy Recovery Onsite Storage Deep Well Injection Total5 Water Consumption (m3) Total Spills and Discharges Recordable Environmental Incident Rate (Incidents per 200,000 hours worked) Total Volume of Spills (m3) SOCIAL DATA 2018 2017 2016 8,965,087 565,546 4,706,282 797,971 1,910,708 16,945,595 1,037,876 271,233 73,388 1,382,496 23,249,327 1,088,192 761,656 6,805 1,784,500 26,890,480 1,837,736 260,784 84,142 2,182,662 22,639,373 970,467 584,445 4,492 1,487,228 25,686,005 1,770,698 205,273 84,142 2,060,113 58 106 130 158,696 50,751 209,447 5,095 88,205 72,821 7,388 7,366 8,236 11,811 8,526 209,447 89,896 70,417 160,313 3,959 57,315 36,091 6,106 3,532 50,291 2,386 633 160,313 269,880 103,990 373,870 180,421 73,851 60,473 41,321 7,337 4,381 3,471 2,615 373,870 2,646,230 1,924,248 1,174,058 0.05 1,034 0.04 142 0.04 208 Total Number of Hours Worked 181,330,469 163,054,003 156,215,306 Number of Fatalities Employee Contractor Total Fatality Rate (Incidents per 200,000 hours worked) Employee Contractor Total Injuries and Process Safety Incidents Total Recordable Injuries High-Potential Incidents Lost-Time Incident Rate (Incidents per 200,000 hours worked) Total Recordable Incident Rate (Incidents per 200,000 hours worked) Recordable Vehicle Incident Rate (Incidents per million miles traveled) Charitable Giving ($’000) In-kind Donations Halliburton Foundation Employee Giving Corporate Giving Total6 Procurement ($M) 0 1 1 0 0.001 0.001 365 199 0.13 0.40 0.48 1 0 1 0.001 0 0.001 301 210 0.12 0.37 0.34 6 1 7 0.008 0.001 0.009 286 195 0.10 0.37 0.30 $ $ $ $ $ 1,968,721 4,137 901 2,610 1,976,368 $ $ $ $ $ 2,107,489 5,826 1,312 1,104 2,115,731 $ $ $ $ $ 2,739,334 5,416 1,294 671 2,746,715 Spend with Small and Diverse Suppliers Business Ethics Code of Business Conduct Reports 790 175 937 180 615 139 Transparency International’s Corruption Perception Index Amount of net revenue in countries that have the 20 lowest rankings, in millions of dollars $ 154.3 Angola $ 58.7 Congo $ 0.6 Equatorial Guinea $ 15.8 Turkmenistan $ 485.9 Iraq $ 3.0 Libya $ 84.9 Venezuela $ 0.2 Yemen 1 GHG Protocol Corporate Accounting and Reporting Standards were used in the calculation of energy use and greenhouse gas emissions. Energy sources include fuel, electricity, heating, cooling and steam. Electricity emission factors are obtained from the International Energy Agency’s CO2 Emissions from Fuel Combustion Report and the United States Environmental Protection Agency’s eGRID publication. 2 A signiﬁcant portion of the reduction in 2018 fuel consumption could be attributed to customer-supplied fuel. 3 Gases covered in GHG emissions calculations include CO2, CH4, and N2O. Global Warming Potentials are obtained from the Intergovernmental Panel on Climate Change Fifth Assessment Report. The chosen consolidation approach for emissions is operational control. 4 All rental vehicle emissions are calculated using the U.S. factors for “Passenger Car – Gasoline – Year 2005–present” due to lack of readily available data on vehicle miles by year of vehicle and location. Emissions from air ﬂeet fuel usage has been calculated using U.S. Jet Fuel emissions factor. 5 Sum of categories may differ from total due to rounding. 6 The sum of Charitable Giving categories may differ from total due to rounding. 48 Halliburton 2018 Annual & Sustainability Report UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS MAPPING The United Nations Sustainable Development Goals (SDGs) were adopted by the global community in 2015. In 2018, Halliburton undertook an exercise to map our material sustainability topics and relevant metrics to the SDGs, in order to assess our alignment with the priorities of policymakers and other stakeholders. The results of this exercise are shown in the table below. HALLIBURTON MATERIAL TOPICS UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS HALLIBURTON KEY PERFORMANCE INDICATORS ECONOMIC Corporate Governance and Business Ethics 16. Peace, justice and strong institutions Economic Performance 1. No poverty 4. Quality education 8. Decent work and economic growth • Hours of training on anti-corruption and Code of Business Conduct • Percentage of spend with local suppliers • Spend with small and diverse suppliers • Training hours per learner • Spend on educational support programs Supply Chain Sustainability 4. Quality education 8. Decent work and economic growth • Percentage of spend with local suppliers • Spend with small and diverse suppliers 12. Responsible consumption and production SOCIAL Health, Safety, Wellness 3. Good health and well-being • Total Recordable Incident Rate • Lost-Time Incident Rate Diversity and Inclusion Community Engagement ENVIRONMENT Energy and Greenhouse Gases 5. Gender equality 8. Decent work and economic growth 10. Reduced inequalities • Percentage of localization of workforce • Spend with small and diverse suppliers • Global Ethics Helpline 1. No poverty 2. Zero hunger 3. Good health and well-being 4. Quality education 16. Peace, justice and strong institutions • Charitable giving • Percentage of localization of workforce 7. Affordable clean energy 13. Climate action • Energy consumption • Greenhouse gas emissions intensity Environmental Stewardship 6. Clean water and sanitation 14. Life below water 15. Life on land • Water use • Recordable Environmental Incident Rate • Spill volume • Waste generation and recycling rate 49 GRI CONTENT INDEX GENERAL DISCLOSURES ECONOMIC INDEX DISCLOSURE TITLE PAGE NUMBER INDEX DISCLOSURE TITLE PAGE NUMBER Organizational Proﬁle Economic Performance 201–1 201–3 Direct economic value generated and distributed Deﬁned beneﬁt plan obligations and other retirement plans P. 1, Form 10-K P. 28–29, Proxy Market Presence 202–1 Ratios of standard entry-level wage by gender compared to local minimum wage We pay over 200 percent of the federal minimum wage in the United States for all entry-level non-exempt employees. Procurement Practices 204–1 Proportion of spending on local suppliers Anti-Corruption 205–1 205–2 205–3 Operations assessed for risks related to corruption Communication and training about anti-corruption policies and procedures Conﬁrmed incidents of corruption and actions taken Anti-Competitive Behavior P. 35–37 P. 29–32 P. 29–32 P. 29–32 206–1 Legal actions for anti-competitive behavior, anti-trust and monopoly practices P. 29–32 Name of the organization 102–1 Activities, brands, products and services 102–2 Location of headquarters 102–3 Location of operations 102–4 Organization and legal form 102–5 Markets served 102–6 Scale of the organization 102–7 Information on employees and other workers 102–8 Supply chain 102–9 Signiﬁcant changes to the organization and its supply chain 102–10 Precautionary Principle or approach 102–11 102–12 External initiatives 102–13 Membership of associations Strategy 102–14 102–15 Statement from senior decision-maker Description of key impacts, risks and opportunities Ethics and Integrity 102–16 102–17 Values, principles, standards and norms of behavior Mechanisms for advice and concerns about ethics Governance Form 10-K P. 4–5, 8–9, Form 10-K Inside back cover, Form 10-K P. 9, Form 10-K Inside back cover, Form 10-K P. 4–5, 8–9, Form 10-K P. 8–9, Form 10-K P. 8–9 P. 35–37 P. 35–37, Inside back cover P. 13, 18, 20, 27, 29 P. 13, 27–33, 54 P. 33, 54 P. 2–3 Form 10-K P. 8 P. 27–32 102–18 102–19 102–20 102–21 102–22 102–23 102–24 102–25 102–26 102–27 102–28 102–29 102–30 102–31 102–32 102–33 102–35 102–36 102–37 102–38 Governance structure Delegating authority Executive-level responsibility for economic, environmental and social topics Consulting stakeholders on economic, environmental and social topics Composition of the highest governance body and its committees Chair of the highest governance body Nominating and selecting the highest governance body Conﬂicts of interest Role of the highest governance body in setting purpose, values and strategy Collective knowledge of highest governance body Evaluating the highest governance body’s performance Identifying and managing economic, environmental and social impacts Effectiveness of risk management processes Review of economic, environmental and social topics Highest governance body’s role in sustainability reporting Communicating critical concerns Remuneration policies Process for determining remuneration Stakeholders’ involvement in remuneration Annual total compensation ratio P. 27–31 P. 27–31 P. 27–31 P. 27–28 P. 27–28 P. 27–28 P. 27–28 P. 27–31 P. 27–31 P. 27–28 P. 27–28 P. 10–11, 27–28 P. 14, 30–31 P. 27–28 P. 27 P. 27–28 P. 28–29, Proxy P. 28–29, Proxy Proxy Proxy Stakeholder Engagement 102–40 102–41 102–42 102–43 102–44 List of stakeholder groups Collective bargaining agreements Identifying and selecting stakeholders Approach to stakeholder engagement Key topics and concerns raised Reporting Practice 102–45 102–46 102–47 102–48 102–49 102–50 102–51 102–52 102–53 102–54 102–55 102–56 Entities included in the consolidated ﬁnancial statements Deﬁning report content and topic boundaries List of material topics Restatements of information Changes in reporting Reporting period Date of most recent report Reporting cycle Contact point for questions regarding the report Claims of reporting in accordance with the GRI Standards GRI content index External assurance Management Approach 103–1 103–2 103–3 Explanation of the material topic and its boundary The management approach and its components Evaluation of the management approach P. 54 P. 41–45 P. 32–33, 54 P. 10–11, 32–33, 54 P. 10–11, 32–33, 54 P. 1, Form 10-K P. 10–11 P. 10 Inside back cover P. 10–11 Inside back cover Inside back cover Inside back cover Inside back cover Inside back cover P. 50 Inside back cover P. 10–11, Form 10-K P. 10–11, 13–19 P. 10–11, 13–19 50 Halliburton 2018 Annual & Sustainability Report ENVIRONMENTAL INDEX DISCLOSURE TITLE Energy 302–1 302–3 302–4 302–5 Energy consumption within the organization Energy intensity Reduction of energy consumption Reductions in energy requirements of products and services P. 22–25, 48 P. 22–25, 48 P. 22–25 P. 22–25 Water and Efﬂuents 303–3 Water withdrawal Emissions 305–1 305–2 305–3 305–4 305–5 Direct (Scope 1) GHG emissions Energy indirect (Scope 2) GHG emissions Other indirect (Scope 3) GHG emissions GHG emissions intensity Reduction of GHG emissions Efﬂuents and Waste 306–2 306–3 Waste by type and disposal method Signiﬁcant spills Environmental Compliance 307–1 Non-compliance with environmental laws and regulations P. 24, 48 P. 23, 48 P. 23, 48 P. 48 P. 23, 48 P. 23, 48 P. 24, 48 P. 25 SOCIAL PAGE NUMBER INDEX DISCLOSURE TITLE PAGE NUMBER Employment 401–2 Beneﬁts provided to full-time employees that are not provided to temporary or part-time employees 401–3 Parental leave Occupational Health and Safety P. 46–47 P. 46–47 403–1 403–9 Occupational health and safety management system Work-related injuries P. 13–15, 18–21 P. 13–15, 18–21 Training and Education 404–1 404–2 404–3 Average hours of training per year per employee Programs for upgrading employee skills and transition assistance programs Percentage of employees receiving regular performance and career development reviews Diversity and Equal Opportunity P. 43–46 P. 14, 43–45 P. 45–47 405–1 Diversity of governance bodies and employees P. 28, 41 Security Practices No signiﬁcant ﬁnes and non-monetary sanctions for non-compliance incurred in 2018. 410–1 Security personnel trained in human rights policies or procedures P. 47 Human Rights 412–1 412–2 412–3 Operations subject to human rights assessments Employee training on human rights procedures Signiﬁcant agreements or contracts with human rights clauses/screening P. 32 P. 32 P. 29, 32 Supplier Environmental Assessment Local Communities 308–1 308–2 New suppliers that were screened using environmental criteria Negative environmental impacts in the supply chain and actions taken P. 35–37 P. 35–37 413–1 Operations with local community engagement, impact assessments and development programs Supplier Social Assessment P. 39–43 414–1 New suppliers that were screened using social criteria P. 35 Socioeconomic Compliance 419–1 Non-compliance with laws and regulations in the social and economic area P. 29–31, 35 51 SUSTAINABILITY ACCOUNTING STANDARDS BOARD SASB TOPIC ACCOUNTING METRIC Emissions Reduction Services & Fuels Management Total fuel consumed, percentage renewable, percentage used in: (1) on-road equipment and vehicles and (2) off-road equipment Water Management Services Discussion of strategy or plans to address air emissions-related risks, opportunities, and impacts Percentage of engines in service that meet Tier 4 compliance for non-road diesel engine emissions (1) Total volume of fresh water handled in operations, (2) percentage recycled Discussion of strategy or plans to address water consumption and disposal-related risks, opportunities and impacts Chemicals Management1 Volume of hydraulic fracturing fluid used, percentage hazardous Discussion of strategy or plans to address chemical-related risks, opportunities and impacts Ecological Impact Management2 Average disturbed acreage per (1) oil and (2) gas well site Workforce Health & Safety Business Ethics & Payments Transparency Discussion of strategy or plan to address risks and opportunities related to ecological impacts from core activities (1) Total recordable incident rate (TRIR), (2) fatality rate, (3) near-miss fre- quency rate (NMFR), (4) total vehicle incident rate (TVIR) and (5) average hours of health, safety and emergency response training for: (a) full-time employees, (b) contract employees and (c) short-service employees Description of management systems used to integrate a culture of safety throughout the value chain and project lifecycle Amount of net revenue in countries that have the 20 lowest rankings in Transparency International’s Corruption Perception Index Description of the management system for prevention of corruption and bribery throughout the value chain CODE EM-SV-110a.1 EM-SV-110a.2 EM-SV-110a.3 EM-SV-140a.1 EM-SV-140a.2 EM-SV-150a.1 EM-SV-150a.2 EM-SV-160a.1 EM-SV-160a.2 EM-SV-320a.1 EM-SV-320a.2 EM-SV-510a.1 EM-SV-510a.2 Management of the Legal & Regulatory Environment Discussion of corporate positions related to government regulations and/or policy proposals that address environmental and social factors affecting the industry EM-SV-530a.1 Critical Incident Risk Management Description of management systems used to identify and mitigate catastrophic and tail-end risks EM-SV-540a.1 Activity Metrics Total number of hours worked by all employees3 EM-SV-000.D 1 Chemicals management was deemed not applicable, as usage of hydraulic fracturing fluid used to open and enlarge fractures within the rock formation is outside of the Company’s operational control. 2 Ecological Impact Management was deemed not applicable, as management of disturbed acreage per oil and gas well site is outside of the Company’s operational control. 3 Number of active rig sites, number of active well sites and total amount drilling performed are not relevant to the Company’s operational control, and have therefore been omitted. 52 Halliburton 2018 Annual & Sustainability Report STATUS SECTION REFERENCE Partial Partial Partial Partial Partial Halliburton Management System: Environmental Stewardship Halliburton Management System: Environmental Stewardship Halliburton 2018 Form 10-K Halliburton Management System: Environmental Stewardship Halliburton Management System: Environmental Stewardship Halliburton Management System: Environmental Stewardship Halliburton 2018 Form 10-K Not applicable See footnote Partial Halliburton Management System: Technology and Process Improvement Halliburton Management System: Environmental Stewardship Halliburton 2018 Form-10K Not applicable See footnote Partial Partial Halliburton Management System: Technology and Process Improvement Halliburton Management System: Environmental Stewardship Halliburton Management System: Health and Safety Halliburton Community: Halliburton Workforce Complete Halliburton Management System: Journey to ZERO Halliburton Management System Complete Environmental & Social Data Complete Complete Corporate Governance, Business Ethics and Stakeholder Engagement: Compliance Management Corporate Governance, Business Ethics and Stakeholder Engagement: Anti Corruption Corporate Governance, Business Ethics and Stakeholder Engagement: Corporate Governance Corporate Governance, Business Ethics and Stakeholder Engagement: Business Ethics Corporate Governance, Business Ethics and Stakeholder Engagement: Human Rights Complete Halliburton Management System: Journey to ZERO Halliburton Management System Complete Environmental & Social Data 53 STAKEHOLDER ENGAGEMENT SUPPLIERS CUSTOMERS • Regular meetings • Industry and trade groups • Operational efficiencies • Supplier Code of Conduct/Governance • Expansion and establishment of new supply chain infrastructures • Supplier training and workshops • Account management interactions • Collaboration/innovation partnership • Trade shows • Industry group events • Workshops • Marketing communications • Publications in mainstream media and trade publications EMPLOYEES INVESTORS GOVERNMENT/REGULATORS • Company-wide presentations • Intranet articles and publications • Regular employee communications from executives, managers, etc. • Succession planning and development • Training programs • Wellness programs • Recognition events • Global employee engagement surveys and initiatives • Quarterly earnings meetings and materials • News releases and U.S. SEC filings • Annual Report • Annual shareholders meeting • Investor conferences • One-on-one meetings • Activities reported to select federal agencies • Industry and trade associations • Policy discussions • Publications in mainstream media and trade publications • Global outreach for regulatory standards NON-GOVERNMENTAL ORGANIZATIONS • Halliburton Foundation • Corporate charitable contributions • Employee giving programs • Sponsorships • News releases and publicity • School programs COMMUNITIES WHERE HALLIBURTON OPERATES • Charitable giving programs • Local sponsorships • Community volunteerism • Industry associations • Publications in mainstream media and trade publications 54 Halliburton 2018 Annual & Sustainability Report ABOUT THIS REPORT This report covers the fiscal period from January 1, 2018 to December 31, 2018 for global Halliburton activities. Halliburton is a publicly traded corporation registered in Delaware and headquartered in Houston, Texas. There were no significant changes to the structure or ownership of the Company in 2018. In this report, the data encompasses all of our product service lines, countries, joint ventures and non-wholly-owned subsidiaries. This report contains descriptions of our 2018 sustainability initiatives. Wherever possible, assessments of performance trends from 2016 to 2018 are provided to better highlight the trends’ significance over time. Topics covered in this report are those most pertinent to our business sector, and they arise from the context and expectations of the sector. The boundaries of this report correspond to those of the 2018 Halliburton Form 10-K. The data included in this report come from the Company’s official management and reporting systems for the various functions described in this document. Halliburton used reporting guidelines and terminology developed by the GRI, IPIECA and SASB to inform reporting. We are working toward alignment with Task Force for Climate-Related Financial Disclosures (TCFD) Recommendations in the future. We provide annual information to CDP, DJSI and other top organizations that assess the economic, social and environmental performance of companies. The 2018 Corporate Sustainability Report was written in accordance with the Core Requirements of the Reporting Guidelines of the GRI Standards, working toward Comprehensive reporting in the future. We have mapped relevant GRI indicators to the UN SDGs and SASB on pages 49 and 52. Published date of previous report: April 2018. Reporting cycle: Annual Restatements of previously reported information are indicated where necessary throughout the report. The Halliburton Sustainability Report has not been externally assured. For additional copies, please contact: Global Sustainability Manager Global HSE, Service Quality and Continuous Improvement Halliburton 3000 N. Sam Houston Parkway E Houston, Texas 77032 United States Your feedback is valued. Please send any comments, questions or suggestions about our 2018 Annual and Sustainability Report to sustainability@halliburton.com or investors@halliburton.com. www.halliburton.com ©2019 Halliburton. All Rights Reserved. Printed in the USA H013163

Continue reading text version or see original annual report in PDF format above