Good day, ladies and gentlemen, and welcome to the Halliburton Fourth Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I’d now like to introduce your host for today’s conference, Mr. Kelly Youngblood. Sir, you may begin.

Thank you, Sam. Good morning, and welcome to the Halliburton's fourth quarter 2013 conference call. Today’s call is being webcast and a replay will be available on Halliburton's website for seven days. The press release announcing the fourth quarter results is also available on the Halliburton website. Joining me today are Dave Lesar, CEO, Jeff Miller, COO, and Mark McCollum, CFO. I’d like to remind our audience that some of today’s comments may include forward-looking statements reflecting Halliburton's views about future events and their potential impact on performance. These matters involve risk and uncertainties that could impact operations and financial results and cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2012, Form 10-Q for the quarter-ended September 30, 2013, recent current reports on Form 8-K and other Securities and Exchange Commission filings. Our comments include non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are included in our fourth quarter press release which, as I have mentioned, can be found on our website. In our discussion today, we will be excluding the financial impact of the fourth quarter charges related to employee severance and other restructuring charges during the quarter of $28 million after-tax or $0.03 per diluted share and the third quarter charges related to employee severance and other restructuring charges during that quarter of $38 million after-tax or $0.04 per diluted share unless otherwise noted. We will welcome questions after we complete our prepared remarks. We ask that you please limit yourself to one question and one related follow-up to allow more time for others who have questions. Now, I will turn the call over to Dave.

Thank you, Kelly, and good morning to everyone. Let me begin with a few of our key accomplishments in 2013. First, I’m very proud to say that we delivered industry leading international revenue growth in 2013, specifically for the full year our Eastern Hemisphere grew a remarkable 17% with profit growth of 23%. That coupled with a solid year in North America resulted in a record year for the Company with revenue totaling $29.4 billion. We also set new revenue records this year in all of our international regions and in both of our divisions. From an operating income perspective we achieved new full year records in our Middle East, Asia region and in six of our 13 product lines. I want to express my gratitude to our 77,000 employees around the globe for their hard work and dedication that helped us deliver these outstanding results. In 2013 we also demonstrated our strong commitment to delivering superior shareholder returns. We repurchased approximately $4.4 billion or 10% of our outstanding shares. We had also increased our dividend twice during the year for a total payout increase of 67% over our 2012 dividend rate. These actions reflect our continued confidence in the strength of our business outlook. We have been and will continue to be relentlessly focused on delivering consistent execution and best-in-class returns. Our strategy has worked well for us and we intend to stay the course. The cornerstones of our strategy remain unchanged, expanding our share within the deepwater market, helping our customers maximize recovery from mature fields and leading in global unconventional development. We believe that these are sustainable growth segments for Halliburton which will allow us to generate superior revenue growth, margins and returns. So I think we had a really good year given what the market gave…

Thanks, Dave. Good morning, everyone. Let me begin with an overview of our fourth quarter results. Overall, I'm pleased with our operational results. Total company revenue of 7.6 billion was a record quarter for Halliburton with operating income of 1.2 billion. We achieved record revenues this quarter in our completion tools, multi-chem landmark, wireline and perforating and testing product lines. During the quarter, our landmark and testing product lines also set new operating income records. Turning to the geographies, our Eastern Hemisphere has record revenue for the quarter with 14% year-over-year growth, while operating income grew 10% for the same period. Sequentially, East Hemisphere revenue and operating income improved 8% and 14%, respectively, driven by our Middle East Asia region. Relative to the third quarter, Europe, Africa, CIS grew by 4% with slightly higher operating income despite some modest weather issues in the North Sea. The UK led the improvement with increased drilling and offshore wireline activity. Also contributing to the growth was increased stimulation in Boots & Coots activity in Algeria and seasonally higher year-end software sales in Russia and throughout Continental Europe. Partially offsetting the growth was lower drilling and wireline activity in Egypt. In Angola, we performed our first pre-salt deepwater open-hole logging jobs in the country on two wells for Cobalt International. Our open-hole wireline logging suite of tools including nuclear magnetic resonance, imaging, coring, seismic and reservoir formation pressure testing and sampling services delivered high quality petrophysical, geophysical and reservoir information for our customer. We also used our ICE Core fluid analysis technology which debuted in the fourth quarter. We continue to build customer confidence in our technology and formation evaluation capability through jobs like this, and the recent successes logging deepwater discovery wells elsewhere in Africa. In the Middle East Asia region, compared to…

Thanks, Jeff. Good morning, everyone. As mentioned last quarter, we've been evaluating our cost structure within the organization as we deploy our HALvantage corporate initiatives. These initiatives are having a significant impact on the support and operational headcount needs primarily in North America, as well as equipment and inventory requirements. During the fourth quarter, as we progressed with the rollout of these initiatives, we took further restructuring actions which resulted in severance and other charges during the quarter of approximately $38 million before tax. Our corporate and other expense totaled $99 million this quarter and included approximately $22 million for continued investment in these HALvantage strategic initiatives. These activities will continue throughout 2014, but the related costs should begin to decline in the second half of the year. We anticipate the impact of these investments will again be approximately $0.02 per share after tax in the first quarter. Including these strategic costs, we anticipate that corporate expenses for the first quarter will be in line with the fourth quarter of 2013. Our effective tax rate for the fourth quarter came in lower than anticipated at 26% due to some favorable tax items in Latin America, but our tax rate does continue to fall as our international taxable earnings continue to grow. As we go forward into 2014, we're expecting the first quarter effective tax rate to be approximately 29% which is about 100 basis points than our normalized rate as we exit 2013. This is driven solely by the exploration of the federal research and experimentation tax credit, which we hope will be reapproved by Congress sometime in 2014. Cash flows from operating activities in 2013 were approximately $4.4 billion, representing growth of 22% compared to the prior year. We also generated approximately $1.3 billion in cash adjusted for stock…

Thanks, Mark. Just in a quick summary, we executed very well in 2013. I believe we had a good year with what the market gave us and delivered what we said we would. Bottom line for 2014 is we expect all of this to translate into double-digit EPS growth. So with that, let's turn it over to questions.

Thank you, sir. (Operator Instructions). Our first question comes from Jim Wicklund of Credit Suisse. Your line is now opened.

Good morning, gentlemen.

Good morning, Jim.

Remind to write-off Latin America as my vacation spot for this year. The CapEx that you guys have spent over the last couple of years, primarily in the Eastern Hemisphere setting up locations, et cetera, that we kind of looked at as some costs, are we going to see an improvement in performance on the basis of that this year? Does that kick-in on a noticeable basis this year, the ability to win projects on more of a variable basis than a fully move into the country for the first-time basis?

Yes, we should start seeing that Jim. The initial investment was to get placed in and at this point now that we have the facilities build out, we are – the incremental projects that come along are being bid at sort of the rates that we would expect to recover. And then as we absorb those costs with additional work, again we'll continue to see the improvement in margins.

Part of that, Jim, is why I think we're so confident that Eastern Hemisphere is going to continue to step-up quarter-over-quarter in its margin realizations because to some extent you are now covering those fixed costs with a wider contract base.

Guys, I just think that's a story that people kind of forget that that's one of the drivers. Okay, and second if I could, record revenues in the entire Eastern Hemisphere, usually if I'm head of Eastern Hemisphere, Dave, and you ask me what am I going to do this year, and me saying, I hope customers spend more, probably doesn't get me a promotion. When you're operating at record revenue level in order to increase returns, don't you have to at some level take some additional risk?

Well, I'm not sure what you mean by risk, but let me take a shot at this. I mean obviously our Eastern Hemisphere is doing well and Joe Rainey who heads that up and his management team, are doing a fantastic job for us. I think really to continue to grow Eastern Hemisphere, one obviously you have to take what the market gives you. And we're seeing some sort of modest level increase in rig count there. So that will help grow the revenue. You have to win more than your normal market share which I believe we’re doing in terms of tender and contract win rates. I’m not sure you necessarily have to take higher risks in your contract pricing. You really have to pick and choose your spots and we have as we said when we responded to the first question we also have a larger footprint in the Eastern Hemisphere now to attack the market off of. So I don’t necessarily think we have to take risk to continue to grow our Eastern Hemisphere business, I think we’re well positioned there. It’s a contract base. We have a great footprint, we have a great management team and I think that will all drive the revenues higher.

Okay. Gentlemen, thank you very much.

Thank you.

Thank you. Our next question comes from Brad Handler of Jefferies. Your line is now open. Brad Handler - Jefferies & Company: Thanks. Good morning, guys.

Good morning, Brad. Brad Handler - Jefferies & Company: Maybe I could ask you to as you think about ’14 for us, just cut up the business a couple of different ways that you have done so in the past. How would you look at offshore growth internationally or maybe in the Eastern Hemisphere versus onshore growth? It just -- it sounds like a lot of the opportunities you identified were actually onshore or onshore driven for ’14?

I think it’s a healthy mix of both Brad. The offshore rig count we see that continuing to grow and obviously one of our clear strategies is to outgrow the deepwater market which we expect to do, but yes there are number of onshore opportunities as well. We think about Russia and China and then certainly the Middle East. So there is a robust onshore market out there. So I think that they’re evenly weighted and I wouldn’t take one over the other. Brad Handler - Jefferies & Company: I mean when you clearly think about the Gulf of Mexico, the Gulf of Mexico should have a good solid growth here on 2014. Now we did say them at Brazil likely is going to be flat slightly down and that is somewhat of a disappointment and sees 2015 being more of a transition year. But you step away from Brazil, the rest of it -- that offshore market should be good?

Yes. Brad Handler - Jefferies & Company: Okay, all right. That’s helpful color. Asking a similar question, but slightly different than your -- as you’ve identified your Brownfield strategy which I know is a multi-year strategy, but how does that in your minds grow in ’14 versus more traditional sort of Greenfield drilling and completion work?

Well, we see the first step out in Mexico. So as we get into 2014, we see Humapa getting ramped up and so we will see contributions there. We are selective around these projects as we take them. We expect to add a few projects per year. Clearly, Humapa being one of those and we have got a number of other sort of things in the works. So expect that to start contributing this year.

I think let me also sort of respond from a capital investment standpoint. We are going to be putting more capital in 2014 into our businesses that orient towards the mature fields strategy both the chemicals, artificial lift and expanding our footprint there both in North America and around the world and then continue to build out tools and other equipment to support what we see as a coming Brownfield opportunity in North America. Brad Handler - Jefferies & Company: That’s helpful. If I may, within that I think you identified -- within the Brownfield strategy, I think you identified a couple of offshore opportunities for example offshore Norway. Do you see those as progressing? On other words, is ICO spending in some meaningful way shifting to production enhancement? Is that generating some incremental opportunity for you as you tender today?

Yes, we see some of that though I would say it’s probably more focused with the national oil companies than it is the IOC. So it’s given kind of the type of investment profile I believe that they have. There are some offshore opportunities, but in terms of the kind of consolidated or we manage all of the activities, those types of things, those are less focused offshore and certainly more focused onshore.

Thank you. Our next question comes from of Doug Becker of Bank of America Merrill Lynch. Your line is now open.

Thanks. I want to clarify the North American revenue guidance a little bit. In the press release you mentioned mid single-digit growth, in the prepared remarks talking about spending in mid single-digits and that you generally outperform underlying spending. I just want to reconcile those comments for North American revenue growth?

Yes, this is Dave. Let me take that -- let me sort of attack it a couple of ways. One is that when we look at sort of what our customers are saying about spending in 2014, you sort of settle in the mid single-digit range. If you look at sort of where we believe the rate count is going, which is up a little, if you look at well count efficiencies which will be up in sort of the mid, maybe upper single-digits and then you can drive revenues sort of off of either of those. I think the important point is that we believe our revenue because of our position in North America it’s going to exceed whatever the market gives us. But we have -- all we can do at this point is gauge off what our customers are telling us they’re going to spend and what they say is sort of the mid single-digits. As I said we will beat that because of our position. We know the rate count will go up a little. We know that efficiency is going to be better. All of that bodes well for us, but we’re just trying to give you a number of data points by which you can then plug in your own growth expectations and then just add some on top of that for what you think will do.

So you wouldn’t be balking at say 7% to 9% revenue growth figure?

let you pin me down:

Fair enough. Another one, I appreciate the difficulty in looking at Latin America growth for the full year. Are you able to give us some perspective of if there is a relief in Brazil, if the latest award or expected award actually starts ramping up in the second half. Are you able to just give some rough gauge about how big a deal those two instances could be for revenue and margins?

Yes.

Go ahead.

Yes, the -- not calling anything on the first half of the year, but if you look at the full year, those are meaningful projects in Mexico. So there is some upside in terms of growth for the full year, but we need to see those get started and work being done on those. But again we will know a lot more about this as we get further into the year.

The way I would probably also add to that is that as I think about the year, the revenue growth number is very difficult to pin. Clearly we talk about Brazil being lower, Mexico may have a late ramp in revenues, but what it does really make a difference in is for our margins, and -- we typically would like to talk about our international margins being in the upper teens and -- but Eastern Hemisphere is clearly on its way. I see some relief on the cost pressure of Brazil and Mexico activities beginning to solidify going forward. It gives us the opportunity to get our margins in Latin America back on track with the rest of the international markets and drive up in those upper teens.

Thank you. Our next question comes from David Anderson of JPMorgan. Your line is now open.

Thanks, good morning. I was wondering if you can just talk a little bit about the PEMEX mega tender a little bit. You said it was reduced from 10 down to 8. I’m just kind of curious what do you think the rationale was? Where those maybe the five ATG projects? I didn’t quite hear you on kind of how you articulated that.

Yes, initially there were 10 mega tender projects that were to be tendered. That number resulted in eight in the end and of those eight the reduction were in the ATG or Northern Mexico projects. Expectation is that’s on the back of really reform. The reform in Mexico is going to be net net, a very positive event for the service industry. But over the near-term there is a milestones and things that would appear will slowdown the investment or at least sort of the decisions around some more potentially over the near-term. So I think that was one of the drivers in terms of a smaller sort of scope overall. I think the total sort of expectation number there was around $3.5 billion which initially has been expected in the $9 billion to $10 billion kind of range.

Right. So now were the terms on -- how are the terms end up on these contracts compared to what you’re expecting? It sounds like they were worsen you were thinking. Is that fair -- because if I heard you right, it sounds like you’re really -- you are only expecting to win the Mesozoic contract, is that correct?

Now that’s correct. Now the terms were – the terms were consistent with what we expected to see. I think we were little surprised by some of the pricing that we saw. I got to think even that there were fewer contracts to go after and there were number of bidders in the bidding for the ATG projects, but pricing on those was significantly down and surprisingly down. And that was just one of those where we’ve -- that was not acceptable pricing for the type of projects that they are.

Got it. Now that Mesozoic is, just correct me if I'm wrong, that's essentially the extension of the Alliance 2 project. So you already have everything mobilized in-country, so it's just a question of that cost absorption. You don't have to ramp up in the country, correct?

No, we don't have to ramp up. It's not really an extension of the Alliance 2 project, but we have the people, the kit, all of the resources in-country. We'll need some rigs to work with us. But outside the rigs, we're ready to go.

I think David, this is David, think of it as we have the resources and people in-country. It's just that as South Alliance ramps down, those people will not have anything to do, that resource will not have anything to do for a period of time until the next contracts, Humapa and Mesozoic, ramp back up. So rather than do a massive layoff and cost reduction and have to turn around and hire the people straight back, we're just going to absorb the costs in the meantime. So we will not have to add very much incremental costs in terms of where we have been. It's just a way underutilized resource for a couple of quarter period of time.

Thank you. Our next question comes from Angie Sedita of UBS. Your line is now opened.

Great. Good morning, guys.

Good morning, Angie.

Hi. So could you talk a little bit about what you're seeing in pressure pumping as far as pricing? Clearly, you had contracts that were being renegotiated in Q4 and we're seeing a little bit of that in Q1. Do you think that pricing could continue to be under pressure into Q2? Have you actually seen an intensification of competition? One of your largest peers mentioned some market share gains, so can you talk about what you're seeing in the market?

We're seeing continued pricing pressure certainly in the market. And so as we go into looking at contracts and pricing, one of the first things we look at, are the customers where we can be the most efficient and execute our value proposition. But the market is clearly competitive.

I would also add, Angie, with respect to market share gains, it's not coming out of our hide, that's for sure. Yes, there is plenty of stacked equipment out there. There's a bit of flight to quality that goes on in this kind of market and even though pricing is challenged, as Jeff has said, and there is some market share shift going on, it's sure not coming out of ours.

I want to reiterate that the 200 basis points of margin improvement in North America for us is net of pricing. So while we assume that pricing will continue to be weak for us, we're working hard to make sure that that does not influence our margins negatively during the year.

All right. Yes, I assumed as much that your market share would not be affected. I guess going to that point, Mark, on the 200 basis point gain in North America. Is that gain in margin weighted to the back half of the year given your mark for Q1? And are you able to quantify yet of that 200 basis points how much is from internal measures, the Battle Red and the Frac of the Future?

Well, it's not that I can't yet articulate how we're going to get there, but I don't know that I want to necessarily for public consumption. But it is our view that as we go through the year, the margins will stair-step higher across 2014. It's a cumulative 200 basis points of margin addition. And so we'll realize it as we get into the end of the third quarter which is typically our highest margin quarter. But it should stair-step higher in Q1 and Q2 as well on a year-over-year basis and sequentially.

Okay. And then as a unrelated follow-up on the international markets, clearly 2013 was pretty impressive where you outpaced your peers on the revenue side and operating income. And I thought, Dave, you said you expect to see the same in 2014. Can you talk about where on a relative basis do you expect to outpace your peers? And is this a combination of market share and new technologies or greater market penetration of some markets?

I think, Angie, it's really all of the above. I don't want to highlight a certain region or that region all of a sudden gets a big target put on its back. But I would say generally, we're really pleased with where we are in terms of our Eastern Hemisphere market penetration contract win rate, introduction of new technology. So I would just leave it as it's – I'm pretty happy all the way across the board.

Thank you.

Thank you. Our next question comes from James West of Barclays. Your line is now opened.

Hi. Good morning, guys.

Good morning, James.

Dave, a bigger picture question for you on North America. You talked about well efficiencies last year. I think you said 14% and you're expecting high single-digits this year. Where do you think we are in this cycle of well efficiencies and how much more do we have to go where the well count can really outpace the rig count, et cetera? It seems like we're starting to slow down on that.

I think clearly the low-hanging fruit has been picked. Right now, I don't see any reason why we will not continue to get year-over-year well count efficiencies. You're starting to see sort of a massive upgrade to the rig fleet that's out there. The move to pad drilling, obviously I think is one of the real drivers we saw last year in terms of the efficiency gains. But as I mentioned in my remarks, the Permian now is switching from what was really a vertical to a horizontal market and there are a lot of rigs running in the Permian right now. And I think that gives us confidence in driving the numbers for 2014 and even beyond that, because let's say the Permian's only at 50% at the end of 2014. That still leaves a pretty tremendous upside there. And there's other plays in the U.S. that are still moving toward more pad, more horizontal drilling. So I think just the nature of the transition of the market, the new technologies that not only Halliburton and the other service companies have, but the rig contractors are investing more in efficiency. So I don't really see an end to it at this point in time, but I think your big low hanging fruit's been picked at this point.

Okay, that's fair. And perhaps an unrelated follow-up on Brazil. I understand that you're negotiating with your major customer there about reducing your investment or your cost structure. What's the timing of when you might have some release on the heavier cost structure than you would have expected given the lack of contract size?

James, this estimate is very difficult to call at this point in time. We're working on a range of fronts to try to resolve it, talking with the customer and certainly what could be resolution but certainly not in the first half of the year. We don't expect to see that resolve.

Yes, I mean the service industry generally doesn't agree on all things all the time but I can tell you, this is one where both us and our peers are all in having the same discussion with Petrobras. We all really need relief at this point.

Sure. Okay, got it. Thanks guys.

Thank you. Our next question comes from Waqar Syed of Goldman Sachs. Your line is now opened.

Thank you. I just want to follow-up on James' questions about efficiency. What are you seeing in terms of efficiency on the pressure pumping side? Where are we in that improvement? It's been – the number of stages per day has been growing in a 24-hour time period. How do you see that trending in the coming years and where we are in that progress?

Waqar, we don't see that outpacing the improvement in drilling efficiently at least at this point in time. So the upshot is there's still more work to be done though we are improving certainly completion efficiency. The other dynamic in completion efficiency though are what we're doing with the completion. So reality is, we're seeing more stages but we're also seeing bigger stages and we're seeing the ability to do more things around the completion. So the concern around the completion outpacing the drilling is not necessarily a concern for us.

Okay. And then just one clarification. I just want to clarify, did you say that the margins in North America are likely to be higher or flat in the first quarter versus fourth quarter?

We expect to see those modestly higher…

Very modest.

Okay, great. Thank you.

Thank you. Our next question comes from Bill Herbert of Simmons & Company. Your line is now opened. Bill Herbert - Simmons & Company: Thanks. Good morning. With regard to your North America guidance in the first quarter, did I understand the flat prophecy for the quarter? Was that inclusive of an outlook for severe weather in the first quarter or did that exclude the prospect of weather in Q1?

Yes, that describe -- we described to you before as high stage count at the beginning of the quarter and then trailed off with the holidays and then a bit of the slow start to some key markets in January due to weather. But what we see is we call out of that is sort of an inverse in Q4. So I call those -- for those reasons about flat.

Yes, it is inclusive of weather. It’s just sort of assuming sort of a similar weather pattern to what we had in Q4. Bill Herbert - Simmons & Company: Okay. And then secondly did I hear you correctly Mark with regard to your Latin American margin roadmap for the second half of the year that we hoped to be in the upper teens realm in line with your other international margins by the second half or in the second half?

Well, hope it’s a -- yes that’s a strong word. Bill Herbert - Simmons & Company: Okay.

I mean that’s where I hope, but I -- right now I just have no ability to forecast thus getting there right now, given what we know on the revenue side. And the cost side, where we’ve talked -- we’ve described that we’re having to carry a significant amount of cost. We don’t have any relief for that cost right now and so we got to get that relief in order to sort of build the roadmap to get back to those upper teen. So yes, that is our hope that certainly what we’re going to continue to drive internally, but at this -- I don’t have it on our forecast right now just because of the uncertainty around cost recovery. Bill Herbert - Simmons & Company: Okay. Thank you.

Thank you. And at this time, I’d like to turn the call back to management for any closing comments.

Thank you, Sam. On behalf of Halliburton management team, I just want to thank everyone for your participation. And Sam you can go ahead and close the call.

Thank you, sir. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today’s program. You may all disconnect. Everyone have a wonderful day.