Evelyn Angelle - Vice President of Investor Relations David J. Lesar - Chairman of the Board, President, Chief Executive Officer C. Christopher Gaut - Chief Financial Officer, Executive Vice President Andrew R. Lane - Chief Operating Officer, Executive Vice President William P. Utt - President and Chief Executive Officer of KBR

Daniel Henriques - Goldman Sachs Jim Wicklund - Banc of America Securities James H. Stone - UBS Geoff Kieburtz - Citigroup James D. Crandell - Lehman Brothers Dan Pickering - Pickering Energy Partners Ken Sill - Credit Suisse First Boston Scott Gill - Simmons & Company International Roger Read - Natexis Bleichroeder Inc. Michael Urban - Deutsche Bank Robert Mackenzie - Friedman, Billings, Ramsey & Co. Robin Shoemaker - Bear, Stearns & Co.

Good day, ladies and gentlemen, and welcome to the Halliburton third quarter 2006 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 would now like to introduce your host for today’s conference, Ms. Evelyn Angelle, Vice President of Investor Relations. You may begin.

Thanks, Matt. Good morning, and welcome to Halliburton's third quarter 2006 earnings release conference call. Today’s call is being webcast, and a replay will be available on our website for seven days. A podcast download will also be available on our website. Joining me today are: Dave Lesar; our CEO, Chris Gaut; our CFO; Andy Lane; our COO; and Bill Utt, the President and CEO of KBR. The press release announcing our third quarter results is available on our website. In today’s call, Dave will provide opening remarks, Chris will discuss our overall operating performance and financial position, followed by Andy, who will review the ESG regions and our business outlook. Bill will address KBR operations. 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 our Form 10-K for the year ended December 31, 2005, our Form 10-Q for the quarter ended June 30, 2006, and recent current reports on Form 8-K. Today, we will be giving you an update on the IPO of KBR. Any sale of KBR Inc. stock under a Form S-1 would be registered under the Securities Act of 1933, and such shares of common stock would only be offered and sold by means of a prospectus. This earnings conference call does not constitute an offer to sell, or the solicitation of any offer to buy any securities of KBR. Now, I will turn the call over to Dave Lesar. Dave. David J. Lesar: Thank you, Evelyn, and good morning, everyone. We had another record quarter in our energy services business, and we believe that the momentum should continue into the fourth quarter and beyond. We will discuss these results in detail with you in a minute, but first I would like to address the issues that I believe are on top of everybody’s mind -- KBR and our outlook on the North American market. We are continuing to work through the KBR IPO process. Since we spoke with you in July, the market for IPOs has improved. Therefore, if we are able to finalize the SEC review process with respect to the Form S-1 within the next few weeks, we expect to complete an IPO of just under 20% of KBR’s outstanding shares. This would be followed by a spin-off of the remaining shares to Halliburton shareholders no later than April of 2007. If we are unable to proceed with the IPO before the end of the year, we would expect to spin-off 100% of KBR to Halliburton shareholders in the early part of 2007. Again, this would be no later than April. Let me shift to the Energy Services Group. As you know, the coalbed methane market in Western Canada began to be impacted by softness in the price of natural gas. However, we have seen no other widespread impact on demand or pricing in our pressure pumping services in North America. We have the base of knowledge, the customer base, the technology, and the experience to successfully work our way through any near-term concerns. Demand for our services in North America continues to be strong. The reality today is Halliburton currently does not have enough capacity to serve all the customers seeking our pressure pumping services in North America. If some of our current customers were to decrease their activities, it would allow us to go to work for others. If this were to occur, we might experience some downtime or mobilization costs during this transition period. We believe we will be able to keep our equipment and people highly utilized. Also, if natural gas drilling were to decrease, we expect to see our customers shift their focus to drilling oil wells in the near-term, rather than letting the rigs go unutilized. Now, let me give you some examples of how we effectively reallocate our equipment and workforce in order to react to changes in the market. We recently, for example, addressed a pricing and utilization issue with a major customer in the Rockies by redeploying our frac fleet to other major customers. This allowed us to realize improved pricing while displacing a competitor. We are also redeploying frac fleets to the MidCon area, to address additional demand from our existing customers. We are also considering sending another fleet to Canada, where our business is focused not in the shallow gas markets but in the deeper areas, such as the foothills. We believe we will be at least able to continue posting our historical high margins, because we have enough demand for our services to keep our fleets fully utilized, even if it means moving equipment to other areas. Most of our customer contracts contain cost escalation clauses that allow us to pass cost increases along to our customers. For those customers that do not have escalation clauses, that work is priced on a call-out basis and inflationary costs are already priced in. We spent a lot of time discussing our near-term outlook for North America with our customers. Other than the shallow and coalbed methane wells in Western Canada, we have seen and heard only limited instances of customers actually shutting down production temporarily until the natural gas price comes back up. So far, this has not impacted our volume. However, in the event that drilling activity does decline, or more production is shut down, our view is that this would rather quickly reduce gas production and allow gas storage to come down sufficiently to bring natural gas markets back into balance, perhaps within one or two quarters. But this is only a hypothetical, so I would encourage you -- do not discount our excellent North America gas position and reservoir knowledge. We believe our equipment will be working when others are not. With the softness in natural gas prices and lower oil prices, we know there is an increase on Wall Street that this cycle is slowing. We certainly do not believe that is the case. Our outlook over the next several years remains very robust. Worldwide demand for hydrocarbons continues to grow, and the reservoirs are becoming more and more complex. This is translating to increased demand for oil field services, particularly those services that reduce drilling time and increase production rates. With that outlook, let me focus on operations. ESG has posted a year-to-date 30% revenue growth compared to the first nine months of 2005. Our operating margins continue to climb. We have posted a 25.7% operating income margin for the first nine months, compared to 22.1% in the same period a year ago. Another of our goals we have visited with you on is to achieve industry-leading returns on equity. Halliburton's consolidated return on equity for the first nine months of 2006, on an annualized basis, was 32%. Excluding KBR, this figure increases by approximately 7 percentage points. Now, some highlights from the third quarter. ESG posted record revenue in the third quarter, with sequential growth of $276 million, or 9%. Production optimization, fluid systems, drilling information evaluation all contributed with record revenue. Within these divisions, all major product services lines posted record revenues. ESG also achieved record operating income and grew operating income at 14.5% on a sequential basis, better than the 9% revenue growth we saw sequentially. Operating income margins were 26.7%, a 130 basis point sequential improvement. Our incremental margins for the quarter were 42%. Our commitment to Eastern Hemisphere growth and profitability continues to pay dividends, as both regions in the Eastern Hemisphere posted record revenue, despite a $9 million impact from the strikes in Norway. The Middle East-Asia region had record operating income, while Europe-Africa was just shy of its record. From a product service line standpoint, Sperry operating income grew 39% sequentially, which was heavily impacted by improvements in the Middle East. Once again, the Eastern Hemisphere showed improved margins, with just over a 21% operating income margin, even with the mobilization costs we are currently incurring to ramp up our Eastern Hemisphere activity. We continue to win large projects in the Eastern Hemisphere. We have recently been awarded two contracts in Indonesia, for a total of $110 million, and a $70 million project in the UAE for cementing and stimulation services. I am also proud of our Latin America region, which posted record revenue and operating income, with a strong, sequential 40% incremental margin. All four divisions contribute positively to the results in Latin America. From a company perspective, let me highlight a couple of other points. KBR backlog continues to strengthen. It increased $4 billion this quarter to a record $15 billion. With the addition of the cutter, gas to liquids project, and task order 139 under our LOGCAP-3 contract. Halliburton's cash position remains extremely strong. We are still pursuing our strategy of $1 billion to $2 billion in acquisitions annually, and are currently looking at a number of options. However, we still feel the best investment is in ourselves, having spent about $1 billion on share repurchases, with an additional $2 billion recently added to that authority. With that, let me turn the call over to Chris, and he will go over more operational details. C. Christopher Gaut: Thanks, Dave, and good morning. I will discuss our third quarter results, compared sequentially to the second quarter. Halliburton company revenue in the third quarter was $5.8 billion. That is up 5% from last quarter. ESG revenue was up $276 million, or 9% sequentially, with all divisions and regions contributing to the positive results. KBR revenue increased $10 million. International revenue was 54% of the total for ESG, and 68% for Halliburton as a whole. ESG operating income increased to $906 million, reflecting a 26.7% operating margin, the highest in our history. KBR reported operating income of $98 million, with an operating margin of 4%, and that is after the $32 million, or $0.03 per share impairment charge. Now, I will highlight ESG segment results. Particularly noteworthy was the broad-based strength of our incremental margins across all four divisions and across each geographic region. Production optimization operating income increased $49 million, or 14%, with a 100 basis point improvement in margins. Production enhancement had a favorable job mix and increased activity in U.S. land and recovery following the second quarter spring break-up in Canada. Utilization of our stimulation vessels was strong worldwide. Completion tools posted strong operating income results, particularly in the Middle East and Asia region, with strong sales for our recently acquired Easy Well product line. Operating income for completion tools also benefited from strong sequential improvements in Latin America, the North Sea, and Russia. Fluid systems operating income was up $18 million, or 9%, due to strong U.S. land activity, recovery from second quarter spring break-up in Canada, and improved results in Africa and the Middle East. Cementing services operating income increased sequentially, led by strength in drilling activity in North America. Cementing’s increased operating income was partially offset by higher mobilization and start-up costs for projects in Africa, Asia, and the Middle East. Baroid continued to increase its operating income margin, led by improved sales and pricing in Africa. Higher demand in the U.S. and the Canadian recovery also contributed to Baroid’s improvement. Drilling information evaluation operating income increased to $227 million, compared to $189 million in the second quarter of 2006, while posting an operating income margin of 26.9%, a 250 basis point sequential improvement. Sperry contributed significantly to the division’s performance, posting sequential improvements in all regions. Sperry had particularly strong performance in the Middle East, with some contribution from the start-up of the Al Khurais project. Security DBS’ operating income increased sequentially, benefiting from improved Fixed Cutter and Roller Cone bit sales in North America and Asia-Pacific. Wireline’s operating income was down slightly, with improvements in several markets, offset by lower direct export sales during the quarter. In the digital and consulting solution segment, operating income improved over 19% from the second quarter of 2006. Current indications are Landmark will continue with its traditionally strong fourth quarter results. Let’s turn to the results for our two KBR segments. In the Government and Infrastructure division, we posted operating income of $53 million, compared to $68 million in the second quarter. Iraq-related revenue decreased by $70 million from the second quarter due to decreased volumes. Our work for the U.S. Navy increased in the third quarter. Our majority-owned U.K. maritime operations posted a strong quarter as well. In the third quarter, we recorded a $32 million, non-cash impairment charge related to an Australian railroad joint venture, and that is due to slower-than-anticipated growth in freight revenue. The second quarter included a $17 million impairment charge related to our investment in a joint venture road project in the U.K. The Energy and Chemicals segment posted operating income of $45 million, compared to the second quarter operating loss of $109 million. Third quarter operating income margin was a strong 7.5%. Schedule delays and cost increases encountered on the Escravos gas and liquids project in Nigeria resulted in a second quarter operating income charge of $148 million, and Bill will provide an update on the Escravos project in a moment. Let’s review some other financial items. In the third quarter, we had an effective tax rate of 33%. Our tax rate this quarter was favorably impacted by tax settlements. Our effective tax rate for 2007 should be approximately 35% to 36%, we think. Capital expenditures totaled $238 million during the third quarter, or $619 million for the first nine months of the year. We expect capital expenditures for the full year 2006 to be approximately $875 million, and for 2007, we see our capital spending increasing to about $1.2 billion. We were very aggressive in our stock repurchase program in the third quarter, buying back 26.6 million shares at a cost of $865 million. The repurchases during the third quarter added $0.01 to EPS, due to the change in average shares outstanding. Now, let me turn it over to Andy Lane. Andrew R. Lane: Thanks, Chris. Good morning, everyone. Before I discuss the ESG operational highlights from a regional perspective, let me make a quick comment about technology and capital. Historically, about a third of our revenue has been driven by new product revenue. With our leadership in technology, coupled with our continued view of a strong market over the next several years, we are increasing our research and development budget by 20% to 30% in 2007. Also, as Chris stated, we are also increasing our capital budget by 40% in 2007. We remain very positive about the outlook for the next several years, therefore we feel very confident about making these long-term investment commitments in technology and capital. I am certainly proud of the overall ESG operating results this quarter -- the highest quarterly revenue and operating income in our history. The third quarter also continued the trend, with 11 straight ESG quarters of increasing revenue and seven quarters in a row of improving operating income. I will begin with the Eastern Hemisphere, which showed revenue and operating income growth in both regions, including record results in revenue and operating income in the Middle East-Asia region, and record revenue in the Europe-Africa CIS region. Our Europe-Africa CIS region showed a $34 million, or a 5% increase in revenue from last quarter. Results in Africa were driven by Baroid’s strong performance in West Africa and Algeria, where we experienced both price increases and higher product sales. Our stimulation vessels in Angola showed increased utilization this quarter, and frac and acid work in West Africa was in high demand. We booked our first wireline revenue in Libya in the third quarter. We recently deployed additional assets to support our continued growth plans for Libya. Africa should have a strong fourth quarter, driven by increased sales of completion tools, increased demand for directional drilling services, and higher activity in Algeria. Our Middle East-Asia region revenue grew $10 million compared to last quarter. This was despite a $15 million sequential decrease in wireline direct sales into Asia. Offsetting the lower direct sales, we saw increased demand for our directional drilling and wireline services in Asia-Pacific. Our results in Saudi Arabia continue to strengthen. In our Sperry business, we saw a significant increase in revenue from the second quarter, related to higher demand for our Geo-Pilot and GeoTap systems, and the start-up on work on the Khurais project for Saudi Aramco. We currently are servicing two drilling rigs for the Khurais project, with an expectation for an additional nine rigs running by the end of this year, and more rigs to be added in the early part of 2007. The project will have in excess of 20 rigs at peak activity levels. Now, turning to the Western Hemisphere. We had a very strong quarter in the U.S. -- in fact, our best quarter ever. Demand for our services was strong throughout the quarter, and we continued to realize pricing gains. Our margins in the Western Hemisphere were the highest in our history. Looking ahead, we have seen limited examples of softening in the U.S. market, due to the weakness in the price of natural gas. So far, this has not impacted our activity. Our scheduling boards are full and we are as busy as we have ever been. We are also preparing for the typical fourth quarter seasonal reduction in activity we see in places like Utah and Wyoming, due to winter stipulations imposed by the Bureau of Land Management, and other areas in which we work that are impacted by weather and the holiday season. We do believe that the softness in natural gas pricing could, in the next three to six months, impact our ability to push through pricing increases as aggressively as we have in the past. If this turns out to be the case, we expect the impact to be short-lived. Our Canadian operations rebounded from the impact of the second quarter spring break-up, with the average rig count for the third quarter increasing to 494 rigs from 282 in the second quarter. Our revenue in Canada increased by 69% from the second quarter. However, late in the third quarter, we began to see a slowdown in shallow wells and coalbed methane drilling activities, as the natural gas spot price declined. We expect to see Canada’s typical busiest season, which lasts from November through March, to kick off shortly. Revenue in Latin America increased 10% from the second quarter. All divisions contributed to the strong results in Latin America. In Mexico, we experienced increased demand for our oil stimulation and drilling fluid services. Venezuela results were also strong, with revenue gains posted by production enhancement, completion tools, Baroid, wireline, and drilling services. Now, I will turn the call over to Bill Utt to address KBR. Bill. William P. Utt: Thank you, Andy, and good morning, everyone. I am certainly pleased about KBR’s overall results for the third quarter, particularly in light of the very difficult second quarter we experienced. We have recently received our six-month [Iraq award peace scores]. Again, we were awarded an excellent rating of 96, reflecting our customers continuing satisfaction with the work we perform, serving the troops in a very difficult environment. We also received an excellent rating for our work for the U.S. Army in Afghanistan. My congratulations to all the KBR employees working on the LOGCAP-3 project for a job well done. As you know, we have been forecasting a drop in revenue related to our Iraq work, but so far, it has not materialized. We have not seen changes in our workload that would be related to a reduction in troop count, so the demand for our services has remained strong. In fact, in August of this year, we were awarded a large task order under our LOGCAP-3 contract for additional work through 2007. But as we have mentioned before, the U.S. Army has announced its plans to transition from the LOGCAP-3 contract to a new LOGCAP-4 contract. The LOGCAP-4 contract will be divided among three contractors, so our work will likely decrease from current levels. We have recently submitted our bid on the LOGCAP-4 proposal to the customer and we understand the work will be awarded sometime during the fourth quarter. The $53 million in operating income posted in the third quarter by KBR’s government and infrastructure division is particularly noteworthy in light of the $32 million impairment charge we reported related to our investment in the Australian railroad. Remember, this is not a construction project, but rather an ownership interest we have in the railroad, similar to the interest we sold last year in the Dulles toll road. We continue to be disappointed with this venture, as it has struggled to meet freight volume growth forecasts. We do, however, remain committed to the investment. We have been working with the project’s bankers to restructure the joint venture’s debt to delay principal payments. Currently, $10 million remains on our books related to this investment. Our Energy and Chemical segment posted a very good quarter. Operating income margins of 7.5% resulted from strong project execution worldwide. Our efforts related to project selection and execution is reflected in these results, and I would like to acknowledge the hard work of our energy and chemical employees in this regard. We continue to be very focused on risk management in selecting and pricing the projects we pursue. At current energy price levels, we continue to see a strong demand for our services, particularly in the gas monetization arena. Now, a quick update on the Escravos project. Our discussions with our customers to reduce our risk in the project have been successful. We have recently executed change orders for amounts in excess of $200 million. With these change orders, portions of the remaining work now have a lower risk profile, particularly with respect to security and logistics. We feel the contingency recorded on the contract remains adequate. We are back to work on the project, and are currently approximately 38% complete. Also, as KBR proceeds to life outside of Halliburton, I am continuing to refine the management structure of the KBR organization in preparation for becoming a publicly traded company. I began this process in the third quarter and expect to be complete by the end of the year. I expect these changes will continue KBR’s progress towards best-in-class risk awareness and risk management. Finally, I am looking forward to leading KBR through the separation process and I am confident the standalone KBR will be a leader in the markets we compete in. All of the KBR employees are excited about the prospect of being part of a standalone company. Let me now turn the call back to Dave for some closing comments. Dave. David J. Lesar: Thanks, Bill. As you can see, we have a lot ahead of us. KBR’s separation is just around the corner. In the Energy Services Group, our Eastern Hemisphere business continues to grow as we invest in key resources in important markets. We are focused on offering the most advanced technology solutions to our customers, as well applications continue to become more and more complex. As Andy said, we are committed to increasing our technology spend significantly as we go forward to make all of this happen. We are also confident that any softness in the North America market will be temporary, as natural gas supply and demand equilibrium will correct itself. Now, let’s open it up for questions. Please limit your comments to one question and one follow-up.

(Operator Instructions) Our first question comes from Daniel Henriques of Goldman Sachs. Your question, please. Daniel Henriques - Goldman Sachs: Good morning. My question is on KBR, just one clarification. Let’s assume a scenario without the IPO. Is there any reason why the spin-off could not happen even earlier in ’07 than compared to your April ’07 deadline? When were you expecting the IRS approval? C. Christopher Gaut: Yes, Daniel, it could happen well before April, in the event of there not being an initial public offering first. Daniel Henriques - Goldman Sachs: Okay, and in terms of the IPO, I am not sure if you mentioned the timing. Is that December, November? C. Christopher Gaut: We are working through the registration process with the SEC and that is hard to predict. We had said here today that we would like to do an IPO, but it would have to be this year. If we cannot get it done this year, then we are going to move on to a straight spin.

Our next question is from Jim Wicklund of Banc of America. Your question, please. Jim Wicklund - Banc of America Securities: Clarification on cap-ex. Chris, didn’t you all say it was going to be $2 billion next year, up from eight and change this year? Did I hear that right? C. Christopher Gaut: No, $1.2 billion. Jim Wicklund - Banc of America Securities: $1.2 billion? C. Christopher Gaut: About a 40% increase. Jim Wicklund - Banc of America Securities: Boy, I hate to waste my question on that. My related follow-up is in terms of cap-ex, the margins and returns that you are getting on domestic pressure pumping business, and everybody else is getting, has attracted a great deal of capacity additions. Where do you think returns on pressure pumping or margins on pressure pumping, how high do you think they can ultimately go? C. Christopher Gaut: Jim, they are very attractive now, as you point out. We do not see deterioration there. But as we look forward to where we will be spending more of our money in 2007, most of the increase is going into our drilling information evaluation segment for additional tools for Sperry and for wireline. Our fluids business is going to have a nice increase in 2007 as well, so we see many good opportunities out there. We are not constrained by good investment opportunities, whether it is in well stimulation, directional drilling, logging well drilling, wireline or drilling fluids and cementing. David J. Lesar: Jim, we are also putting more of our pressure pumping investment into the Eastern Hemisphere in 2007, where we do see some more uplift in margins from pressure pumping in that hemisphere.

Our next question is from James Stone of UBS. Your question, please. James H. Stone - UBS: I just want to, Andy, talk a little bit about -- if we could revisit the comments that you made in July on pricing and what you thought it would be like to implement pricing in the second-half of the year, and see if you can update us on what you experienced in the third quarter and then how you see going forward, both on the domestic side as well as on the international side. Andrew R. Lane: Yes, Jamie, and we did talk about it in the second quarter, and what we were referring to is the slowing in the increase of price increases. We did see, however, and were very encouraged in August and September on pricing in the improvement we did receive in the quarter. The prices did improve, both in the Eastern Hemisphere and the Western Hemisphere. As you know, the majority of our current work in the U.S. is on contract on some form of annual type contract, and so roughly 70%, 80% of that work, we will negotiate prices for 2007 here in November-December, and we are encouraged by the outlook that we will have at that point, and we are still optimistic we are going to push prices through in the November-December timeframe for the majority of our U.S. North America work. James H. Stone - UBS: Okay, and then just a related follow-up on the DFE side, that business was very strong in the quarter. You are obviously committing more capital to it. Is the growth going forward there, could you give us a sense of how much you think is volume versus price? Andrew R. Lane: As you know, we have been constrained in Sperry, and we are catching up with our manufacturing deliveries. We also see a lot of opportunity for growth, so we are putting, as Chris said, even more of our capital investment into Sperry. So it is mostly volume-driven, and it is a very competitive segment of the market, but we see still good growth in top-line and good margin improvement as we deploy in the Eastern Hemisphere. One prime example is the Al Khurais that we talked about. We are only on two rigs there. As you know, that is a 100% Halliburton project, and so we are going to be ramping up to over 20 rigs, so we are optimistic there that Sperry will do very well in Saudi. We are still seeing a lot of rollout of our technology, of wide acceptance of Geo-Pilot and GeoTap, and we are working on several more technology rollouts that will happen in 2007.

Our next question is from Geoff Kieburtz of Citigroup. Your question, please. Geoff Kieburtz - Citigroup: Good morning. I guess I was a little bit surprised at a 40% increase in the cap-ex. Could you go into a little bit more detail as to maybe -- I understand more going into DFE, but could you give us some calibration here, how much is going into each major segment compared to what your ’06 cap-ex allocation was? C. Christopher Gaut: Sure, Geoff. The biggest increase is in drilling information and evaluation, as I mentioned, and that will be a substantial increase. A lot of it having to do with some of the contract wins that we have, as well as just for general expansion as we see in our Eastern Hemisphere business. The next largest increase will be in the fluid segments, building out cementing skids for the new rigs, new offshore rigs going into service, and the expansion of our business there. But also, in drilling fluids, as we build out bulk plants in additional areas to serve the increased markets we see in West Africa, North Africa, Asia, for instance, and Latin America. Then, the third would be production optimization, in terms of increase. That is completions facilities, manufacturing capacity, as well as the continuing build-out of our fleet and replacement of our fleet and importantly, the build-out of our fleet for Eastern Hemisphere applications in places like Russia, Middle East. Hopefully that will give you a picture there, Geoff, if that is sufficient. Geoff Kieburtz - Citigroup: Would you offer maybe a split on your pressure pumping investment? What amount is outside of North America? C. Christopher Gaut: Well, North America is, of course, a very large production enhancement market, but our deliveries in North America next year, we are actually going to be down from 2006 a bit, but up outside of North America.

Our next question is from Jim Crandell of Lehman Brothers. Your question, please. James D. Crandell - Lehman Brothers: Thank you. Very good quarter. My question, Andy or Dave, relates to Sperry and the technology development. Your main competitor has introduced a family of tools in the last couple of years which seem to go beyond what anything else has done. Where are you in coming up with a family of tools which can really look out from the formation and compete on an equal footing, let’s say, with what this built family offers? Andrew R. Lane: Jim, we are continuing to expand in a couple of areas. First, in the breadth of our Geo-Pilot and GeoTap line of equipment, we are the only ones with a slim hole, full offering on rotary steerable, plus the GeoTap, so we see a large demand for that and we are going to continue to invest in that technology and deployment of that. We also see several developments coming out in early 2007. Our mid-end rotary steerable technology that we have been working on for six to 12 months, we will see that being commercialized in mid-2007, and we are very optimistic about that market share. We are also working -- Tim Probert has several new developments coming out on the Sperry side for additional technology that will roll out in 2007 and 2008, so we feel we will be in a very strong position next year in technology comparisons. James D. Crandell - Lehman Brothers: Okay, and my related follow-up is, where are we in terms of the new offshore rigs that have been ordered in ordering cementing skids? How well do you think you are doing overall in terms of market share thus far in placing skids on the new offshore rigs that are being constructed? Andrew R. Lane: We track that very closely, Jim, and we are doing excellent this year. I think we are outpacing three-to-one our competitors in placement of cement skids. We track that as a net number across both refurbs and new builds, so we are very pleased with the progress there and that is part of our capital spend, as Chris said, in cementing units, and cement skids is a big part of that.

Our next question is from Dan Pickering of Pickering Energy Partners. Your question, please. Dan Pickering - Pickering Energy Partners: Good morning. On KBR, there seems to me there are a lot of moving pieces, obviously. If we added back the Australian charge, you did about $130 million in operating income in the third quarter. Is that the right general area for us to think about fourth quarter and sort of a 2007 run-rate? Andrew R. Lane: That was an exceptional quarter for KBR and we would not guide KBR as that on a consistent basis. That is I think something that they can aim for, but in terms of guidance on an ongoing basis, I think that is when everything goes exactly right. Dan Pickering - Pickering Energy Partners: My other question would be, could you talk to us a little bit, refresh us on your acquisition strategy, where you guys are looking, and give us an update on whether or not the changing commodity price environment for both gas and oil, has that helped, hurt, or no change to your opportunity base? C. Christopher Gaut: We are pursuing a number of potential deals, as Dave mentioned. We are not going to talk about the specifics there. Clearly the valuations of public companies have come down, but it is also true that a seller’s price expectations do not necessarily come down as fast as the public market pricing. That is taking a bit -- it is a little bit harder to work through that, but we think we will get there on some deals that we are working on now that we think will be important and additive to our results. In the meantime, we feel that our opportunistic approach to our stock repurchase is the right approach. You saw that we were aggressive in the third quarter. Of course, we are out of the market for buying back stock by the company. It is the same basis we are for insiders until we were out of the market since the end of September, until we announced earnings here, but we see that as a good opportunistic value and will be continuing to pursue that.

Our next question is from Ken Sill of Credit Suisse. Your question, please. Ken Sill - Credit Suisse First Boston: Good morning. I do not think the horse is dead yet, so I am going to beat it one more time, on pressure pumping cap-ex. Could you give us a feel of how much -- obviously you guys have inflation, so in the 40% increase in cap-ex, what do you think that is going to translate into in terms of an increase in actual capacity? Will it be as much, or half of that? Do you have any idea on that? Andrew R. Lane: We will be adding equipment and adding capacity next year, but not as much as in 2006. For competitive reasons, we are not going to quantify that, Ken. As we mentioned before, the economics of reinvesting in that business are outstanding, but we have a good jump on that, maybe ahead of some others. Now, with the improvement in so many other markets around the world, we are seeing very good investment opportunities in these other areas, and that is why we are putting so much capital there as well. We like the North America well stimulation business. We are continuing to invest in it, but we are also looking to become bigger in so many other areas, and so it is a broader-based program for 2007 than we have ever had before. Ken Sill - Credit Suisse First Boston: Okay, and then as a follow-up, one of the big debates is, is there any real differentiation in a lot of the new [capacities] coming on, or is the market in North America differentiate-able? As a corollary there, do you guys have an estimate what the average life of some of this pressure pumping equipment would be, given how hard you are running it these days? Andrew R. Lane: I definitely think the U.S. market is differentiated on technology. We feel very strongly that we lead in the high tech, deep high pressure frac applications. The only area that is really a commodity type market would be the water type fracs and some of the shales. Even within the shales, of that being produced, the unconventional gas there, we see a lot of technology being applied recently in horizontal wells with pinpoint simulations. That is clearly a differentiating technology that Halliburton is applying, with some record results on those wells. There is definitely a different scale on pressure pumping and the technology being applied in the U.S.

Our next question is from Scott Gill of Simmons & Company International. Your question, please. Scott Gill - Simmons & Company International: Yes, good morning. Bill, I was wondering if you could answer for me, if you look at the Escravos project and what has occurred there, if you couldn’t just contrast the Escravos GTL project with the Pearl GTL project in terms of contract terms and maybe what those risks are on the Pearl project as we look forward? William P. Utt: Certainly, Scott. The Pearl project is fundamentally a reimbursable project for us. As such, we are performing services at the direction of the client group, and they instruct us what to do, we place packages, so fundamentally, the risk return aspect of that is a much lower risk profile than we see on a fixed price EPC project such as Escravos. We spent a lot of time in the last six months since my arrival focusing on risk awareness, and I think we are doing a much better job of really identifying the risks and asking very thoughtfully, how do you best allocate those risks within the contracts, and also, how do you price the risks that we retain within KBR? Fundamentally, the difference between Escravos is a lump sum turnkey project where we are putting our balance sheet behind the contract for a fixed price, in contrast to Pearl, which is a reimbursable project. Scott Gill - Simmons & Company International: My follow-up then, Bill, is as you look forward on the ENC side at KBR, what does that opportunity set look like as you do go into 2007 in terms of major projects? William P. Utt: The market remains strong for the products and services that KBR provides, particularly around the gas monetization arena. I think we continue to be able to look at a lot of projects, and we see a great, good market to be a participant in for 2007, and through the end of the year. We are seeing, from our standpoint, the chance to shape projects very thoughtfully with our customers and have much more intimate dialogs with them regarding what risks the contractor should bear, and certainly the pricing for those risks, and what risks are most appropriately born by the customer. I think we are excited about the market as we see it continue to unfold for us for 2007, and we think we will be able, through our dialog with our clients, to be able to have a richer series of discussions that I think will result in a higher value added by KBR in the client capital expenditure programs that we participate in.

Our next question is from Roger Read of Natexis Bleichroeder. Your question, please. Roger Read - Natexis Bleichroeder Inc.: Good morning. I guess my main question is, you look at the possibility of a slowdown in the U.S. regarding the pressure pumping. You mentioned mobilization would go up and utilization I guess would go down. Could you give us an idea of what utilization has been running at this point, and what you have seen in a prior -- let’s call it plateau or slowdown -- in terms of the impact on utilization? Andrew R. Lane: Yes, Roger. We are basically 100% utilized right now. Third quarter, as we said, was a peak in activity for us, and we were fully utilized across the board. We do not see any -- and we have a very good outlook for the next 60 days, of course, and we see very strong workload through the full fourth quarter, so we have very little concern at all in the slowdown there in work in the short-term. Longer term, we still see our position in the market is very strong, and we know from living through many down cycles and slow downs, that we usually maximize our market share in the slower periods as the smaller players fall out, and we certainly think that would happen again, if there was any slow down this time. We are still seeing full utilization and we plan to continue that. David J. Lesar: The mobilizations are within North America, from one base to another, and that’s what this equipment is made to do. We are not talking about huge disruptions. Andrew R. Lane: It is very common for us to move people and equipment between the Rockies, MidCon, South Texas, and then we are just going to optimize the location where the most work is. Roger Read - Natexis Bleichroeder Inc.: Okay, so it is fair to say that mobilizations are not anything new, and like you say, it is not something we would necessarily see as long as it is within fairly contiguous regions within the United States? Andrew R. Lane: Yes, you will not see it. The mobilizations that take longer and higher cost are the mobilizations to Algeria, the ramp-up on Khurais, some work in Amman, those are the types of mobilizations -- mobilizations to Libya and Russia. They take a little longer and are a little more expensive, but you are not going to see it in the U.S., and we do not plan to see much of a downturn as we -- David J. Lesar: We are not talking about -- when we talk about mobilizations within our oil stimulation business in North America, we are not talking about moving equipment out of North America.

Our next question is from Michael Urban of Deutsche Bank. Your question, please. Michael Urban - Deutsche Bank: Thanks, good morning. It seems like the focus in the market has been on gross capacity additions in the pumping business. I was wondering if you had a sense or you could offer a sense for what the attrition rate is, either in the industry or specific to Halliburton? Then, if that might change, if indeed you did see a slowdown, would you just start taking more equipment out of the market? Andrew R. Lane: Yes, Mike, you hit it there at the end. That is exactly what we do. Of course, 2005, 2006 had been so robust that we have not taken a lot of older equipment out of the market, and if there was any slowdown activity, that would certainly be one of the things we look at doing. But we have done a lot of investment over the last couple of years, so the age of our fleet is in very good shape, but there always are a few pieces of equipment that are much older that we would take out. Michael Urban - Deutsche Bank: Any sense of that attrition rate, either industry-wide or specific to you guys? Andrew R. Lane: There’s just not a lot right now. David J. Lesar: No, there is not a lot right now. We have time for one more question, Evelyn?

Yes.

Our next question is from Robert Mackenzie of FBR. Your question, please. Robert Mackenzie - Friedman, Billings, Ramsey & Co.: Good morning. I wanted to dig a little deeper into your viewpoint that Halliburton would hold up better in market share if there is a downturn. I wanted to get how you would respond to pricing moves. For example, if one of your smaller competitors decided to cut price to maintain share, and also if one of your larger competitors tried the same? David J. Lesar: We do not compete in a lot of markets heads-up with the smaller competitors, so their pricing tactics are not of primary importance to us. Of the three large competitors, we are very competitively priced, and we do not see any, as we said in the third quarter, we did not see any impact on pricing. We actually had positive movement on pricing during the quarter, so we still feel very strong about our position there. Robert Mackenzie - Friedman, Billings, Ramsey & Co.: My follow-up is in prior downturns, you have often seen one or more of the big names lead the way in taking prices down to maintain share. What is your viewpoint on either Halliburton doing that or one of your competitors doing that this time? Andrew R. Lane: Halliburton will not do that, and we still see this very much as a demand-driven market, and we do not see that happening, so we are not foreseeing that cycle happening anytime in the near future. David J. Lesar: One last question.

Our final question is from Robin Shoemaker of Bear Stearns. Your question, please. Robin Shoemaker - Bear, Stearns & Co.: Yes, thank you. I wanted to just go back to the cap-ex budget for a minute. I think you told us in Houston that $1 of cap-ex, you expect to generate $4 of revenue. I wonder if that would still be the case as you shift cap-ex a little bit away from pressure pumping equipment? The timeframe for cash on cash return on capital spending, what is your basic guideline or principle there? Andrew R. Lane: In the past couple of years, we have had that kind of revenue increment associated with the capital spending that we have had. We are not counting on that kind of increment necessarily continuing right away, from this additional cap-ex. As we build up cap-ex, the growth would be attractive but maybe not at that remarkable rate. Robin, the economics that we look for are a 15% after-tax, un-leveraged internal rate of return, and in this market, with these opportunities, we feel that we are clearly exceeding that with the discretionary spending that we are doing here. As I said earlier, we have more opportunities, good opportunities, then we are going to take advantage of here in this market. We will ration them out and this is where we have come out, as I described earlier. Robin Shoemaker - Bear, Stearns & Co.: Right, and in terms of the split of cap-ex next year, this $1.2 billion, I believe you have indicated that 60% of this year’s cap-ex is North America. Is it shifting more to international in ’07? Andrew R. Lane: Very much so, very much so. Robin Shoemaker - Bear, Stearns & Co.: You do not have a percentage breakdown for us on that? Andrew R. Lane: Certainly a significant more of the majority is going to be outside North America next year, so most of the growth is outside North America, and that is a lot of growth, as you have seen.

This concludes our question-and-answer session for today. I would like to turn it back over to management for any closing remarks.

Thank you, everyone. That concludes our call. If anyone has further questions, please feel free to call us sometime today. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Good day.