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Halliburton Oil Well Cementing Company - Lehman Brothers Collection

Halliburton Oil Well Cementing Company

List of Deals

Erle Palmer Halliburton founded the Halliburton Oil Well Cementing Company in 1920 in Oklahoma. One year after the company's founding, seventeen trucks carried its crews and equipment to drilling sites in Louisiana, Arkansas, and other oil-rich areas from a base in Oklahoma.

The jet mixer, a mechanized mixer that did away with hand-mixing of the minimum 250 bags of cement and water slurry needed for each well, revolutionized the oil industry. Because it could control the proportions of cement and water, it eliminated wasted slurry that would harden before it could be poured. By 1924 Halliburton and his wife, Vida, converted their partnership into a corporation and offered a substantial interest in their business to other oil companies. Their trump card lay in their meticulous patenting of all new processes and devices, which had left the oil companies unable to have oil wells cemented without using Halliburton services. Company patents also covered processes designed for well recementing, a maintenance necessity that gave the Halliburton's relative independence from competitors. The Halliburton Oil Well Cementing Company was incorporated in Delaware that year.

By the time the company reached its ten-year milestone in 1929, research and development had improved processes and equipment to the point where a mixture made up of 2,500 sacks of cement could be injected into a well in forty-eight minutes. By that time, the use of four new company planes made for speedy contract completion. Marking this important anniversary was the Halliburton entry into Canada, as well as offering for sale a wide range of oil well apparatus.

The 1930s saw automobile production and domestic oil heating soar. These circumstances benefited the oil industry. As the decade ended, oil and gas were supplying 44.5 percent of the U.S. total energy requirements. Halliburton's expansion kept pace with demand. It opened four new branches in 1932, enabling it to send seventy-five cementing and well-testing crews to sites in seven states. The company introduced bulk cementing to replace hand moving of heavy cement sacks. Eager to participate in the marine oil exploration taking place in the Gulf of Mexico, Halliburton also began to mount equipment on ships and barges.

In 1940 the Halliburtons bought Perkins Cementing Company, extending operations to the West Coast and the Rocky Mountain region. The company established its first South American subsidiary in Venezuela in the same year. These two moves proved profitable; just one year later, earnings reached $13.5 million, of which $2 million was net profit. Soon after the Pearl Harbor attack, the company began to make gun-mount bearings for the U.S. Navy. Other war materials manufactured included parts for the B-29 bomber and jigs, fixtures, and dies for the Boeing airplane plant in Wichita, Kansas. Wartime contracts were lucrative; when World War II ended, annual earnings reached $25.7 million. In 1948 Halliburton shares were offered on the New York Stock Exchange for the first time. By the end of the 1940s, although well cementing and bulk cement sales accounted for about 70 percent of company revenues, there were other profitable undertakings, all supported by specially designed equipment. Electrical well services provided information on the types of formations penetrated by a drill; acidizing of geological formations increased oil flow; and specialized equipment deposited various cements and chemicals into wells. Most profitable of all was a new process called Hydrafrac, licensed exclusively to Halliburton for a period of time by its developer, the Stanolind Oil and Gas Company. Designed to increase well productivity, this method used jellied gasoline, which was pumped under pressure into the bottom of a well to split the rock formation. This resulting crack was then propped open with quantities of sand, making penetration of tight rock formations easier. The Hydrafrac process made it possible to rejuvenate many dwindling oil wells and reduced the number of sites necessary to drain a field. A surge in annual revenues showed Hydrafrac's great success: $57.2 million in 1949, increasing to $69.3 million the following year, and leaping to $92.6 million by 1951.

Between 1950 and 1955 the company expanded in all directions. Drilling activity increased dramatically. Equipment by that time included formation-testing tools to obtain fluids and pressure readings from oil-bearing rock, plus other new equipment used in well completion operations. Wall cleaners, depth measuring equipment, and production packers were other lines that drillers could rent or buy. Services provided by the company included electronic logging and sidewall well-coring, and the transporting of cement and fracturing sands to drilling sites from nearby Halliburton storage areas. Oil exploration in the Texas and Louisiana Gulf Coast areas was flourishing. Research and development kept the company at the forefront of oil exploration technology. Costing $3 million in 1956 alone, it rewarded the company's efforts with a new composition for cementing deep wells and a method for making the fracturing sand radioactive, among other innovations. All of this was reflected in the annual sales figures, which reached $152.4 million by the end of 1955 and produced net profits of $16.3 million.

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