I've tried to read the numerous Halliburton diaries today, and it has truly tested my patience. I am not an apologist for them, but for gods sake can we keep a modicum of reason behind this?
Some myths to debunk:
Halliburton=KBR
Halliburton is leaving the US for Dubai
Halliburton is leaving the US for Dubai for [insert dubious reason here]
Halliburton is leaving the US for Dubai for tax reasons
Let us first remember what Halliburton is. Per their Corporate Overview:
Halliburton adds value through the entire lifecycle of oil and gas reservoirs, starting with exploration and development, moving through production, operations, maintenance, conversion and refining, to infrastructure and abandonment. We operate in over 120 countries working in four major operating groups:
Halliburton consists of three business segments:
* Drilling, Evaluation and Digital Solutions
* Fluid Systems
* Production Optimization
These segments offer a broad array of products and services to upstream oil and gas customers worldwide, ranging from the manufacturing of drill bits and other downhole and completion tools to pressure pumping services.
But Eli... one might say. Did you forget about KBR?
KBR... a name we all love to hate is now a separate entity, and Halliburton is removing any controlling stake as quickly as possible. Arguably due to what will probably happen to KBR under the current administration.
Halliburton is NOT closing up shop and moving to Dubai. As an excellent Slate Article points out:
Halliburton's headquarters has moved, but the company is still incorporated in Delaware and remains subject to U.S. law and taxes. Halliburton also says it won't lay off or transfer any of the 4,000 employees in Houston. The company will still have to pay U.S. income taxes on revenue generated in its U.S. business, which amounted to $194 million last year.
Yet then why would they be relocating their CEO and making such an investment in a new location. According to Reuters:
The company as a whole has continued to diversify internationally, and the Middle East is a point that they have targeted," said William Sanchez, a U.S.-based analyst at Howard Weil Inc.
"They are being opportunistic in putting the CEO in the middle of the action."
Sanchez said he believed Halliburton's move to Dubai was not tax related. Instead he viewed it as a strategic play.
Alan Laws, an analyst at Merrill Lynch, said the move would likely help Halliburton's position in negotiating large contracts.
Another thing left unsaid is that Halliburton probably wants to detach itself from its association with the US due to growing Anti-American sentiment in the Middle East. They probably share a great interest in seeming like more of a Global company, rather then an American one.
Tax benefits? Not really... Per the above Slate Article
Not much, for the time being. Halliburton's headquarters has moved, but the company is still incorporated in Delaware and remains subject to U.S. law and taxes. Halliburton also says it won't lay off or transfer any of the 4,000 employees in Houston. The company will still have to pay U.S. income taxes on revenue generated in its U.S. business, which amounted to $194 million last year.