Good day and welcome to today's Halliburton Company Third Quarter 2005 Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to the Vice President of Investor Relations, Ms. Evelyn Angelle. Please go ahead.

Good morning, and welcome to Halliburton's third quarter 2005 earnings release conference call. Today's call is being webcast and a replay will be available on our website for seven days. Joining me today are Dave Lesar, Chairman, President, and CEO; Chris Gaut, Executive Vice President and CFO; and Andy Lane, Executive Vice President and COO. The press release announcing our third quarter results is available on our website at www.halliburton.com. It estimates the impact the Gulf of Mexico hurricanes had on different parts of our business. Overall the hurricanes negatively impacted our third quarter net income by $0.05 per diluted share. We have tentatively scheduled our 2005 fourth quarter earnings release conference call, Friday, January 27, 2006, at 9:00 a.m. central standard time. In today's call, Dave will provide opening remarks. Chris will discuss our overall operating performance and financial results followed by Andy covering strategy and our business outlook. We will welcome questions after we complete our prepared remarks. Before turning the call over to Dave, I would like to remind our audience that some of today's comments may include forward-looking statements, reflecting the Company's view about future events and their potential impact on our performance. These matters involve risks and uncertainties that could impact the Company's operations and financial results and cause our actual results to differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2004, Form 10-Q for the period ended June 30, 2005, and recent current reports on Forms 8-K. Now I will turn the call over to our CEO, Dave Lesar. Dave.

Thank you, Evelyn, and good morning everyone. I'm pleased to record another quarter of solid financial performance at Halliburton. Despite the Gulf of Mexico's pretax impact from the hurricanes of proximately $33 million, we achieved record consolidated operating income of $690 million. While the situation in the Gulf has claimed everyone's attention, in reality the hurricanes are only a small part of the news we will share with you this morning. First of all, regardless of what you may read in the papers, we did not do any work for FEMA. In fact, as of today, KBR's hurricane-related work is less than $200 million and is being done under the competitively bid CONCAP contract. In the ESG, I'm happy to report that not only did we achieve record revenues in operating income, but we also posted an operating income margin of 21.8%. Part of this is attributable to the price increases we have implemented in the past. I also announced in September additional price increases beginning this month. These will range from 6 to 18% depending on the product line and Andy will give you more details on those in a moment. We also continue to benefit from our strong focus on return on capital. This is being demonstrated by our fixed or exit strategy, where we are focusing our attention on our lowest performing areas in order to continue driving up our margins and returns by getting better terms from our customers or by exiting the market and taking that equipment to areas where we see higher returns. This has a short-term impact on a region's revenue and cost as we demobilize and remobilize that equipment, but I believe that it is in ESG's best interest in the long run and Andy will give you more details on that…

Thanks, Dave and good morning. I will comment on the overall company and individual segment results. I will summarize the change in revenue and then operating income for each of our six segments and then discuss our liquidity and other financial matters. In my remarks, I will be comparing third quarter of 2005 results sequentially to the second quarter of 2005. Halliburton Company revenue was $5.1 billion in Q3, essentially flat from the prior quarter. Energy service group revenue was up $126 million, or 5% sequentially with three of the four ESG divisions setting new revenue records. KBR revenue went down 7% sequentially primarily due to reduced activity on the competitively bid LogCAP contract in Iraq. On a consolidated basis, international revenue was 72% of the total. Halliburton achieved record operating income of $690 million for the third quarter. Overall, ESG operating income increased by $44 million reflecting a 70 basis point operating margin increase. This was driven by higher natural gas drilling activity and continued pricing strength for our services, particularly in North America, where the market continues to be exceptionally strong. KBR operating income increased 23% in the third quarter to $150 million, operating margins rose by 150 basis points to 6%, with the sale of an interest in the U.S. toll road contributing $85 million to operating income, partially offset by losses and project joint ventures in Algeria. Now, I will highlight the ESG segment results. Beginning with production optimization, where revenues increased $61 million or 6% compared to the second quarter of 2005. Production enhancement led the segment with a 14% increase due to high demand in U.S. land for stimulation services and a strong rebound in Canada. Completion tools revenue decreased 10% due to effects of the hurricanes in the Gulf of Mexico, the large…

Thanks, Chris. Good morning, everyone. ESG turned in another record-setting quarter. reflecting continued robust activity in the market. The management team we have in place at the ESG is doing an excellent job in capitalizing on the current opportunities. Our employees are working very hard and we continue to add direct resources to meet the improved demand. If you look at the first nine months of 2005, compared to this same period in 2004, we've had top line growth of over $1.4 billion, or 24%, and we've improved the operating income by over $700 million. Our September ESG year-to-date margins were 22%. We are proud of our management and our dedicated hard-working employees who delivered these great results. I will talk about each region in a moment but first I wanted to describe how the hurricanes in the Gulf of Mexico prevented us from having an even greater quarter. Halliburton was relatively fortunate; nevertheless, we sustained heavy damages to both our Baroid and cementing Louisiana facilities in Cameron, Bennett and Intercoastal City. We have shifted our activity to other facilities while those are being repaired and we are now ready to continue operations at the pre hurricane levels. As you know, some of our customers' platforms and rigs were damaged or lost and it will take them a while to reestablish pre hurricane activity levels. We do expect customers to resume the activities that were curtailed by the storms throughout the end of the year, and into the first half of 2006. Our Gulf of Mexico activity is about 70% of pre hurricane levels. Meanwhile, we have deployed a number of our Gulf of Mexico personnel to higher utilization areas until activity levels resume. The third quarter ESG hurricane impact of $0.04 per share is based on a mix of…

Thank you, Andy. You can see we remain very bullish and optimistic about where the industry is, and the future in terms of customer spending. Our company has obviously endured a lot of challenges in the past year, including resolving asbestos, getting the election behind us, and our learning experience on Barricuda. But that's behind us now. Today we're going about our daily business of focusing on higher profits and returns for our shareholders. And we are moving forward with quarter after quarter of financial improvements. I think that the management team feels good to get back to some semblance of life being normal. Now we'll take your questions. We ask you to limit to one question, and one follow-up per caller. Thank you.