EPIC announcement from Haliburton

Halliburton announce that KBR (better known as Brown and Root) will no longer pursue lump sum engineering, procurement, installation and commissioning (EPIC) contracts for the offshore oil and gas industry. KBR has faced major challenges with recent lump sum EPIC contracts, in particular the Barracuda Caratinga project in Brazil. This job helped KBR record a pretax loss of $119 million in second quarter 2002 results.

While the EPIC announcement identifies a major shift in Haliburton's offshore business strategy, the company strived to reassure staff, and contractors, that there is still a tremendous market for their services. Offshore Operations will continue as a product line and a strategic component of KBR's portfolio of services. KBR will continue to provide the same services as today, but primarily on a cost-reimbursable basis. In today's market, lump sum EPIC contracts for offshore facilities are not considered to have an acceptable balance between risk and potential reward.

There will be no change in the strategies or business models for KBR's other business lines. The Onshore, Infrastructure, Government, Operations & Maintenance (including Production Services) and Technology groups will continue to operate just as they do now.

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