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Halliburton deal sealed
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September 30, 1998: 4:05 p.m. ET
Chiefs of newly created oil-services giant see good times ahead despite oil prices
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NEW YORK (CNNfn) - The creation of the world's largest oil-services firm cleared its last regulatory hurdle Tuesday, when the U.S. Dept. of Justice approved the $7.7 billion merger between Halliburton Co. and Dresser Industries after Halliburton agreed to sell drilling data corporation LWD Services.
The new company, which is called Halliburton (HAL), also announced Tuesday it is taking a charge of $900 million against its third-quarter earnings for the acquisition of Dresser.
Halliburton's chief executive officer, Dick Cheney, a former U.S. Secretary of Defense; and William Bradford, formerly chairman of Dresser and now Halliburton's chairman, spoke with CNNfn's "In the Game" Wednesday about how they expect their new company to fare given oil's down market.
Following are highlights from that discussion.
KITTY PILGRIM, CNNfn: Let me first ask you why the regulatory clearance took so long? This is unusually long.
DICK CHENEY: Well, the process went forward in a fairly normal way from the standpoint of the Justice Department. We announced our merger plans at the end of February, and they just cleared off this past week on the transaction itself. It's a fairly complex process. These are two large companies that we're putting together … to create what will be the world's largest oil-field services and energy-services company. So we think it moved reasonably expeditiously.
PILGRIM: Let me address my next question to Mr. Bradford. The oil industry is under siege at this point. You have just gotten a bigger piece of the pie, but you must admit it is a smaller pie at this time. How do you expect to maximize the results of your merger and do business, build business ahead?
WILLIAM BRADFORD: Yes. Well, first of all, what we have created by virtue of the merger is the ability to further extract values from the combination of these two companies. The merger in itself -- by virtue of our ability to cut cost (and) downsize to the current marketplace -- will play well to our shareholders and to our customers.
But the other side of the coin is that our new company has three major segments, one of which serves the upstream part of the marketplace -- the drilling completion and production marketplace. But we have very, very significant activities and differentiation in the engineering and construction segments of the energy business and in the manufacture of equipment that goes into other parts of the energy business.
So our new company is very well positioned to go into the future on this basis.
PILGRIM: Mr. Bradford, did lower oil prices help drive this deal?
BRADFORD: Well, actually, Dick and I had talked about this merger early in the fall of last year, and at that time things were going fairly well in terms of oil and gas prices. So our merger made sense prior to the downturn and, in my view -- and I think Dick shares that view -- makes even more sense today.
PILGRIM: I'd like to get both of (your) … assessment(s) on oil prices. We have seen a bit of an increase in prices. What is your estimate on how well they will recover in the near future?
CHENEY: Well, we try to avoid making predictions about oil prices. We ought to be in a different business if that's what we were good at. I think what we can say is that in the long-term the outlook is very good for our industry. The world's going to need somewhere between 45 and 50 million barrels of additional production per day come (the) year 2010, just 12 years from now. (There's) clearly going to be a great demand for what we do.
In the near-term, with prices at these levels -- as you say they have improved recently, but we hope they'll improve more and stabilize more. One of the benefits of the merger is that even in the down market, we're going to be able to increase our earnings by taking significant cost out as we put the two companies together. So we think the timing's perfect for the merger in part because of market conditions now in the oil industry. 
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