Evelyn Angelle - Vice President, Investor Relations David J. Lesar - Chief Executive Officer C. Christopher Gaut - Chief Financial Officer Andrew Lane - Chief Operating Officer

Geoff B. Kieburtz - Citigroup Ken Sill - Credit Suisse James D. Crandell - Lehman Brothers Roger Read - Natexis Bleichroeder Scott Gill - Simmons & Company Brad Handler - Wachovia Securities Jeff Tillery - Pickering Energy Partners

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Halliburton's second quarter 2007 earnings call. (Operator Instructions) I will now turn the conference over to your host, Ms. Evelyn Angelle, Vice President of Investor Relations. Ms. Angelle, please begin.

Thanks, Christopher. Good morning and welcome to the Halliburton second quarter 2007 earnings 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. The press release announcing the second quarter results is available on the Halliburton website. Joining me today are Dave Lesar, our CEO; Chris Gaut, our CFO; and Andy Lane, our COO. In today’s call, Dave will provide opening remarks, Chris will discuss our overall operating performance and financial position, followed by Andy, who will highlight some of our recent contract wins and technology successes. 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 Halliburton's views about future events and their potential impact on performance. These matters involve risks and uncertainties that could impact operations and financial results and cause our actual results to differ from our forward-looking statements. These risks are discussed in Halliburton's Form 10-K for the year ended December 31, 2006; our Form 10-Q for the period ended March 31, 2007; and recent current reports on Form 8-K. Also, please refer to this morning’s earnings release and our website for any non-GAAP disclosures. Now I’ll turn the call over to Dave Lesar. Dave. David J. Lesar: Thanks, Evelyn and good day, everyone. I’ll begin my remarks by discussing and focusing on the North America markets, which in Q2 represented 47% of our total revenue for the quarter, then provide a few highlights from our international operations and then include our view for the remainder of the year. First, let me address the U.S. frac market, which accounted for approximately 17% of our consolidated revenue for the first-half of this year. I’m very happy to report that we have been experiencing a good recovery from the frac market slowdown this past winter. We have been tracking frac activity levels by month and saw steady increases each month between March and June. In fact, in June we experienced the highest frac revenue in our history, which I think may come as a surprise to some folks who think the frac market is headed for a significant decline. We are expecting activity levels and equipment utilization rates to continue to increase throughout the rest of this year as our customers work toward achieving their 2007 production goals. We’ve seen a slight deterioration in pricing, less than 5%, in the first-half of this year, and this could continue during the second-half of the year. However, we continue to differentiate ourselves through our leading market position in technology, service quality, and reservoir knowledge. Our expectation is that activities will remain high for the balance of the year. Unlike our frac business, the other part of pressure pumping, our cementing business, has not experienced the volatility in activity nor the pricing pressures we have experienced in the frac business. Demand for our U.S. cementing services has remained strong. We’ve also been focusing on diversifying our U.S. operations by capitalizing on the trend toward increased horizontal or directional drilling in the land market. Our Sperry, drill bits, and completion tool business each benefit from this shift from traditional vertical drilling programs. Overall in the U.S., we’ve increased operating margins by more than 100 basis points on a sequential basis and in fact, we posted the highest U.S. revenue in our history, which goes to demonstrate the strength of our franchise. We’ve also been awarded recently some major multiple product line contracts in the U.S., which will continue our diversification program for this market, and Any will talk about these in a moment. Canada has experienced a significant decline in activity and pricing as compared to last year and of course, March through June was impacted by the spring break-up season. Beginning in late 2006, we began moving equipment and personnel from Canada to the U.S. and Latin America to address the anticipated slowdown. We also put into effect a reduction in workforce. These steps were prudent considering what took place in Canada this quarter. Our drilling information evaluation segment was hit particularly hard by the slowdown in Canada and accounted for approximately $20 million of that segment’s decline in operating income on a sequential basis. Looking ahead, we’re not planning on a significant recovery in Canada this year, outside of a seasonal recovery from the break-up. To give you some perspective, Canada revenue represents less than 5% of our consolidated revenue in 2006 and should be even less this year. Now let me provide some highlights and results on our outlook on the company outside of North America. First, our sequential Eastern Hemisphere revenue growth was in excess of 14%, an excellent result, and our Eastern Hemisphere operating margins improved by over 100 basis points to 22%. Our commitment to allocating capital to product lines with high growth potential in the Eastern Hemisphere is clearly showing up in our record revenue. Our sequential incremental margins for Latin America, Middle East, Asia regions were in excess of 40%. However, since we’ve been planning for more growth, we are continuing to increase our international workforce and are incurring training costs for these personnel now in anticipation of future revenue generation. The same is true for our investment in infrastructure to support our international growth. While these costs impact the bottom line now, we believe they will pay off in the future. We remain very bullish on our ability to grow Eastern Hemisphere operations for the balance of this year and throughout the rest of the decade. We’ve also completed all conditions for closing on the PSL acquisition. The effective date for this closing will be July 31st. This transaction is roughly 50% larger than the Ultraline acquisition we closed earlier this year and will provide an improved diversification into international markets for our production enhancement businesses. PSL is a recognized leader in well intervention and pipeline and production services. Their market concentration is in Europe, the Middle East, Azerbaijan, Algeria and Asia-Pac. We’ve also signed a definitive agreement to acquire Burservice, a Russian national directional drilling company with a strong market position in northern Siberia. This acquisition gives us a new area for expansion and is well-positioned to capitalize on the growing horizontal drilling market in Russia. We plan to expand their current service offerings to include our rotary steerable and LWD technologies Our completion tools operation posted exceptionally strong results in the second quarter. Chris will give you some details around this in a few minutes but I wanted to mention two new large contracts that were recently awarded. First, a five-year $200 million contract in Malaysia was awarded. Also, completion tools was awarded a $170 million five-year contract in off-shore China for sand control completions for over 200 wells. And our landmark operations posted a strong second quarter. This bodes very well for landmark’s contribution during the second-half of the year, as we usually see landmark results ramp up in the latter part of the year. Let me turn the call over to Chris now and he’ll give you some more details on the quarter. C. Christopher Gaut: Thanks, Dave. I will discuss our second quarter results compared sequentially to the first quarter. Halliburton's revenue in the second quarter was $3.7 billion, up $313 million or 9% from last quarter. More than three-fourths of the increase came from outside of North America, where we saw higher activity in all international regions and a recovery from the seasonally slower Russia, Caspian, and North Sea markets and as Dave said, we continue to see an increase in activity in the U.S. from the slow period we experienced last winter. Canadian revenue was down to about half of the first quarter amount. Operating income increased $105 million, or 13%, over the first quarter. Production enhancement and completion tools contributed significantly to this increase. Our strong sequential growth came despite Canada, where we actually had a loss in the second quarter. Second quarter results included a $49 million gain on the sale of our remaining interest in Dresser Inc. This gain is reflected in operating income in our digital consulting solutions segment. Our diluted earnings per share for the second quarter was $1.62, consisting of $0.63 from continuing operations and $0.99 from discontinued operations. We recognized a $933 million net gain on the disposition of KBR as discontinued operations during the second quarter. The gain represents the difference between the book value of our remaining 81% interest in KBR and the fair value of the 85 million Halliburton shares that were exchanged, net of the estimated fair market value of the indemnities provided to KBR and net of related taxes. Our second quarter share count was impacted by the 85 million shares we brought into treasury on April 5th as a result of the KBR split-off, as well as resumption of our share repurchase program in May. Under that program during the second quarter, we repurchased 25.7 million shares at an average price of $35.37 per share. As we announced earlier this month, our Board of Directors recently increased the authorization on our share repurchase program by an additional $2 billion. Having repurchased $2.2 billion of our stock over the past 16 months, we now have approximately $2.8 billion remaining under our authorization. We will continue to take advantage of low valuation to buy back shares aggressively, as we did during the last few months. As of June 30, we had actual shares outstanding of approximately 890 million. The dilutive effect of the premium on our convertible notes and employee equity compensation usually adds approximately 40 million to our diluted EPS calculation. Now I’ll highlight the segment results. Production optimization revenue increased $196 million, or 15% from last quarter, and operating income grew $78 million, or 24% over the first quarter. Production enhancement revenue increased 12% and operating income grew 18%. These results reflect a strong recovery of the U.S. land frac market, increased second quarter activity in the North Sea and Caspian areas as compared to a seasonally slower first quarter, and improved stimulation vessel utilization. Of course, Canadian production enhancement revenue and operating income were adversely impacted by the slowdown in the seasonal spring break-up. The performance of our completion tools business was the highlight this quarter. Completion tools revenue increased 22% over the first quarter and operating income grew by 40%. Much of the 310 basis point operating margin improvement was due to solid performance in our reservoir information and sand control product lines and was bolstered by increased sales of some of our leading technology products, such as Easy Well swell packers. Completion tools’ Eastern Hemisphere revenue grew by 31% and operating income in the Eastern Hemisphere completion tools grew by 53%. The improvement was widespread geographically. In the Middle East, we had increased intelligent well and other completion product sales into Saudi Arabia and Qatar. Africa revenue was up sharply due to higher activity in Western Africa and Egypt, as well as more high-end completion product sales. Completion tools also posted strong revenue and operating income growth in Latin America and in Asia-Pacific. Results from our well dynamics joint venture improved over the prior quarter as they continue to work through their supply chain issues. Looking ahead, completion tools revenue and operating income margin will likely come down a bit in the third quarter as their revenues tend to vary quarter to quarter due to the timing of deliveries. We have recently won a number of completion projects, as Dave mentioned. We are ramping up our manufacturing capacity and completion tools so the future prospects here are quite good. Fluid systems revenue increased $52 million or 5%, while operating income declined by $14 million or 7%. Cementing revenue grew 5% while operating income remained flat. Canadian cementing revenue decreased by nearly three-fourths of the first quarter level, reflecting the break-up season. As you’ll recall, we moved personnel and equipment out of this market in anticipation of the slowdown and spring break-up. This decline though was more than offset by increases in the U.S., Mexico, Russia, Caspian, and North Sea activity. Baroid revenue also grew by 5% reflecting higher activity, primarily in offshore operations in the North Sea and in the Gulf of Mexico. The large contract win that we had last year in Norway is progressing well and the customer is beginning to award us new work outside of that contract as a result of our service quality. Baroid’s second quarter operating income was unfavorably impacted by the Canadian downturn and a $7 million charge for an additional reserve for an old environmental matter in the U.S. Further, we experienced some start-up costs as we open more Baroid bulk plants around the world. Turning to our drilling and formation evaluation segment, revenue increased $36 million or 4% over the prior quarter, while operating income decreased $21 million or 8%. Sperry’s results were significantly impacted by Canada’s spring break-up season. In the Eastern Hemisphere, results were very strong with Sperry posting a 15% increase in revenue and a 25% increase in operating income as compared to the first quarter, led by offshore work in West Africa and the North Sea, and the continuing ramp up in Asia. For our wireline and perforating operations, low Canadian results accounted for most of the decline in operating income compared to the first quarter. Outside of North America, wireline and perforating posted an 8% increase in revenue and a 13% increase in operating income. As you know, we’ve been steadily adding wireline and perforating capital equipment over the last year or so and this investment is now showing results. Our drill bits business posted a 5% increase in revenue yet operating income decline 13% from the prior quarter, primarily due to Canada. Our operations in the North Sea and in Africa were positively impacted by improved sales of drill bits and increased activity from our down-hole tools, particularly our new XR reamer hole enlargement tool. In the digital consulting solution segment, landmark revenue grew 28% and operating income 89% over the seasonally slow first quarter. As I mentioned earlier, the $49 million gain on the sale of our interest in Dresser Inc. is included in this segment. Landmark experienced revenue and operating income growth in all four regions on improved sales of software and consulting solutions. Now I will address some additional financial items. As we announced in May, our Board of Directors increased our dividend by 20%, which reflects the Board’s and management’s positive long-term view on Halliburton's growth prospects. Our annualized after-tax return on equity for the second quarter was 32.8%, based on continuing operations and excluding the gain on sale of the Dresser investment. We expect depreciation and amortization to be approximately $135 million to $140 million per quarter during the remainder of 2007. The effective tax rate for continuing operations in the second quarter was 32%, reflecting the higher mix of foreign income. We expect the effective tax rate for the remaining quarters of this year to be in the 32% to 33% range. And we expect general corporate costs to be approximately $60 million quarterly for the remainder of the year. Now let me turn it over to Andy Lane, our Chief Operating Officer. Andy.

Thanks, Chris. Good morning, everyone. What I’d like to do now is update you on some of our more significant projects around the world, including some exciting new project wins and also let you know about some recent technology successes. Our Khurais project in Saudi Arabia continues to go well. In particular, utilizing geo-pilot rotary steerable technology, Sperry has exceeded the client’s planned drilling performance expectations. New security drill bit designs are also contributing to improved drilling performance. The real-time operations center established earlier this year in Saudi is providing a significant contribution to our overall performance. We now believe the project will reach its peak during the first quarter of 2008. Another important country for us is Mexico, where the National Oil Company has an aggressive plan for future development. We had a long and positive relationship with PMEX and we continue to grow our business there. PMEX is now one of our top five customers worldwide and Mexico is now larger for us than Canada. We’ve also targeted growth in Latin America outside of Mexico. One recent example is the $140 million contract award to our completion tools product line to provide exploration and development testing services in high pressure, high temperature environments. Our differentiated technologies in large board drill stem test tools and memory data acquisition services were important factors in this award. In the U.S., we’ve had some significant wins in the past few months. Halliburton has signed a long-term agreement with a major operator to provide primary well services for a Rockies asset. Specifically, the services includes Sperry drilling services, Baroid drilling and completion fluids, security bits, cementing, logging and stimulation. If the agreement endures for the full length of its primary term, we value it at approximately $450 million. The arrangement creates and immediate and long-term opportunity for efficiency gains and the application of technology and processes to exploit significant gas reserves. Another multi-service contract was entered into the Rockies for another major operator. Halliburton will provide all services in this multi-year award valued at $170 million. One of the shell trends expansion areas is in the Northeastern U.S., where Halliburton was awarded an $80 million multi-year contract that includes fracturing, cementing, coal tubing, directional drilling, drilling fluids and tools. Currently our pinpoint stimulation technologies are being used for evaluation of the horizontal wells and future wells will also include the aqua-stem service on the fracturing treatments. The aqua-stem service has proven successful in other shell projects and conventional pipe gas in the U.S. The application of our delta stim completion system is also expanding into the Northeast. In Kentucky recently we did nine stages were stimulated in one well bore, allowing for interventionless operation. During the second quarter, we introduced new technology at Sperry, the pilot family of rotary steerable tools. We introduced our geo-pilot rotary steering service to the market in 2002. We are now offering four additional tools in the pilot family. First, a new version of the geo-pilot called the geo-pilot XL that is designed for higher levels of reliability in more challenging drilling environments. We expect to achieve a substantial increase in reliability with this service. Second, the geo-pilot GXT tool, which combines a high-performance motor with geo-pilot for even higher rates of penetration and vibration control in harsh drilling environments. Third, the EZ-Pilot rotary steering service designed for lower cost, typically land-based operations. You may recall EZ-Pilot was a technology acquisition we did in late 2005. We finalized the development of this tool and it is now commercial. Finally, the V pilot, a high precision vertical drilling tool. Our pilot fleet offering gives us a strong technology base to accelerate our growth in Sperry drilling services. Although we only have a limited number of tools for the EZ-Pilot, the GXT, and the V pilot, based on the demand we are seeing we have an aggressive drill schedule for new tools. You should see these tools adding meaningfully to Sperry’s results in 2008. In the second quarter, over 60% of Sperry’s revenue was generated in the Eastern Hemisphere and these new technology introductions will further strengthen and grow our Eastern Hemisphere business. We are very excited about the six project wins totaling $1.2 billion in future revenue, with $700 million coming from the Rockies and the Northeast and $510 million coming from outside the U.S. Finally, we are optimistic about the additions of PSLES and Burservice to our portfolio. These businesses expand our capabilities and our 100% Eastern Hemisphere growth for us. Now I’ll turn the call back to Dave for some closing comments. Dave. David J. Lesar: Thanks, Chris and Andy. Our quarterly results reflect our continued commitment to grow outside of North America. Sperry and completion tools led that growth for us but each of our product lines, except for production enhancement and landmark, posted the highest revenue in their history. I want to thank all of our employees around the world for this significant achievement. As I said earlier, we look forward to continuing to grow our business in both the Eastern and Western Hemisphere and are very excited about the opportunities that we see in front of us. Now we’ll go ahead and take questions. Christopher, could you go open the phone lines for Q&A please.

(Operator Instructions) Our first question or comment comes from the line of Jim Crandell. Your line is open, sir. Mr. Crandell. It looks like he is no longer in queue. Mr. Crandell, if you could please press the one key once again. We’ll take our next question. It comes from the line of Geoff Kieburtz with Citigroup. Your line is open. Geoff B. Kieburtz - Citigroup: Thanks. Good morning. Can you hear me okay? David J. Lesar: Yes, we’ve got you, Geoff. Good morning. Geoff B. Kieburtz - Citigroup: I want to come back to your comments on the pricing, Dave. You said that you had seen about a 5% -- well, I guess, could you just repeat them? Five percent pricing decline and the expectation you might see that extend into the second-half -- does that mean further declines? David J. Lesar: There clearly is price competition in the frac market in the U.S. What we’ve seen so far this year, 2007, as we said, is just under 5% price decline in our average pricing so far this year. We do expect that there will be continued price pressure in the second-half. Andy.

Overall when you look globally, we’ve had stable prices but as we referred with Chris and Dave’s comments, the under 5% is limited to the frac business. We have roughly 65% of our contracts now renegotiated with the new pricing that we’ve talked about in the first-half of the year. So we see that same competitive market going on in the second-half. Geoff B. Kieburtz - Citigroup: Okay, so same competitive market meaning pricing stabilizes or pricing continues to contract something like 5% every six months?

That’s the rate we saw in the first six months, Geoff and we’re saying is that we expect that there will be continued price decline in the second-half. Geoff B. Kieburtz - Citigroup: Okay, all right. In spite of the fact that you are seeing record levels of demand? David J. Lesar: We are. It’s hard to say where that’s going to balance out but that’s where we are at this point in time, Geoff. Geoff B. Kieburtz - Citigroup: In terms of the contracts, Andy, you mentioned that 65% of your contracts have been renegotiated. To what extent -- does that mean that there is a fixed price for that work going forward for what, the next year?

Well, Geoff, as you know, we have a lot of different contracts. Some one-year contracts, some multiple-year contracts like the ones we talked about in the script today. And then there is a transactional market that is small, relatively small for us. So yes, there’s contracts that are in place for the year and we expect most of those contracts to hold. Geoff B. Kieburtz - Citigroup: Okay, so the price -- that work would not be exposed to any further changes in the spot market?

That’s correct. Geoff B. Kieburtz - Citigroup: Okay. And just a quick one -- I think, Chris, you mentioned something about a $7 million charge at Baroid. C. Christopher Gaut: That’s correct. Geoff B. Kieburtz - Citigroup: And that is -- C. Christopher Gaut: An additional reserve for an environmental matter dating back to Baroid, an ancient history there, yes. Geoff B. Kieburtz - Citigroup: Okay, and that is in the operating income line for fluids for this quarter. Okay, great. Thank you very much.

Thank you. Our next question or comment comes from the line of Ken Sill with Credit Suisse. Mr. Sill, your line is open. Ken Sill - Credit Suisse: Thank you and congratulations. Good quarter. Things happen a little bit different than I expected in terms of margins and I guess the one thing that looks a little disturbing is the trend in North America where the margins have eroded fairly steadily since Q2 of last year. I’m wondering -- obviously the volumes in North America seem okay and Canada is past the worst part. Do you think the margin erosion is going to continue or will the volumes be able to kind of slow or stop the margin erosion in the North American business? David J. Lesar: Well, Ken, this quarter clearly the biggest impact on our North American margins was Canada and Q2 is always the low point in Canada. As we mentioned, we actually had a loss this quarter in Canada, and so the decremental margins were quite severe. So we won’t have that downward sequential change going forward. And then as we mentioned, we do have some pricing pressure in the frac market in North America, although the volumes and the activity there are quite good.

I would just add there is the pressure in frac but the rest of our pricing in the U.S. has stabilized, especially in cementing and our drilling business and completion business. As Chris said, we’ve seen a steady improvement in the overall demand level, April, May and then June was, as Dave said, the record in our history for both frac revenue and our total U.S. revenue. And so we are seeing a good strengthening demand. We see a good quarter ahead of us for activity and so those two offset each other somewhat. Ken Sill - Credit Suisse: And then just a follow-up; looking at the specific product lines, drilling and formation evaluation, again I’m assuming that Canada was the big hit there, although on a year-over-year basis the margins were up slightly. So should we expect a nice rebound in margins there or is it Canada plus new costs related to rollouts internationally and it might actually be a little bit slower to rebound, the timing there?

The Canada -- we should see a good rebound in third quarter. We are very strong in Canada in Sperry and security DBS, our business up there and they were both heavily impacted. And we also too on the start-up of the Ultraline costs, and so all three of those impacted that segment significantly and we should see a good return in third quarter. Ken Sill - Credit Suisse: Thank you. I’ll let somebody else ask some questions.

Thank you. Our next question or comment comes from the line of Jim Crandell. Your line is open, sir. James D. Crandell - Lehman Brothers: Can you hear me now? David J. Lesar: Yes, Jim, we can. James D. Crandell - Lehman Brothers: Okay. I’m sorry. Andy, I’m sorry but I still didn’t understand part of your answer to Geoff. You said contracts in place for the year in U.S. stimulation you expect prices to hold. Does that mean hold from the levels they are at the first-half or does it mean the one-year contract renewals that you negotiate late this year for 2008 you expect to hold versus ’07 levels?

Jim, let me clarify; the 65% of the contracts we renegotiated in the first-half of 2007 were on the new pricing and we expect those to hold into 2008. The rest of the transactional market and the contracts we are yet to negotiate, we will negotiate the contracts here in the next 60 days, 90 days. We’ll see a lot of that contract activity happen in the third quarter and then the transactional market is uncertain where the pricing will go there. James D. Crandell - Lehman Brothers: And how do you expect the contracts that you’ll negotiated for ’08 to be in the, that you negotiate in the third and fourth quarters, how would you expect those to be ’08 pricing versus ’07 pricing?

Well as Chris said, there’s going to be some pricing in some isolated areas but overall, we feel good about the level of pricing we had in the first-half of 2007 and the big thing for us, Jim, is demand continues to increase as we brought capacity to the market and we are expanding our frac business to the record levels we’ve had, so activity and effective utilization will play an important part of our overall profitability in the second-half. James D. Crandell - Lehman Brothers: Okay, a tougher question for Dave; Dave, how much of your time have you been spending now in the Middle East, and specifically in Dubai? Is it possible to start to see the effects of you personally spending more time there? David J. Lesar: I think, Jim, I’ve been spending -- I can tell you that I’ve spent six of the last seven weeks outside of the U.S. In fact, I just got back in last night but just as when I was based in Houston, I really didn’t spend a lot of time in my office in Houston. So I’m traveling extensively through the Eastern Hemisphere at this point in time. I remain very excited about the opportunities for continued growth that I see over there but I would not attribute any particular success in our business to the fact that I’m based out of Dubai versus Houston. We have a great diversified workforce through the Eastern Hemisphere, great technology over there. But I think the reaction from our customer base, especially the senior executives of our Eastern Hemisphere-based customers and national oil companies about my living and working out of Dubai has been very, very positive. James D. Crandell - Lehman Brothers: Okay. Good to hear and good quarter. Thank you.

Thank you. Our next question or comment comes from the line of Roger Read. Your line is open, sir. Roger Read - Natexis Bleichroeder: Good morning, gentlemen. A quick question for you; didn’t really hear much talk about it, kind of a quiet quarter on the acquisition front. Can you update us on what you are looking for, whether or not with some weakening in North America if some acquisitions potentially look better here, prices having become more reasonable from the asking side, and if there’s anything in particular internationally that makes more sense than something else? David J. Lesar: Well, we did talk about two acquisitions, Roger. We talked about the PSL acquisition that will close at the end of this month and then we talked about the new one that we just announced, the Burservice Russian directional drilling company, and we have that agreement now and closing is expected in the near future. So those are both examples of businesses that we can -- we acquired a base of operations in the Eastern Hemisphere and can add our technology and our product line through them and grow them. Back in the Western Hemisphere, we also announced this quarter the acquisition of Vector Magnetics, which is a key technology for steam assisted gravity drilling in Canada, SAG B, the heavy oil production technique and with us taking ownership of that technology, it will give us a very strong market position in that space going forward, and that acquisition is now closed. So those are examples of the kinds of things we are looking for, our focus going forward, Roger, continues to be on products or technologies we can put through our distribution system, or finding local operations that we can build by adding our technology. The fact that the private equity market maybe is cooling a bit, maybe a little bit more difficult to get financing, will hopefully work to our advantage. Roger Read - Natexis Bleichroeder: And then a follow-up question; as you look internationally, a lot of these new contracts, whether Mexico or in the Middle East, you’ve talked a lot of times about, or recently in several quarters about start-up costs being a significant factor. You mentioned that in terms of the second quarter for DF&E up in Canada with the recent acquisition. Do you expect to see any moderation in start-up costs or are there enough contracts out there in new -- I don’t know, new parts of a country or new countries, where that likely is just the run-rate at this point and we shouldn’t look for any particular margin changes as a result of a change in start-up cost pace?

Let me address that. It varies widely depending on what business you are talking about. On the completion tools where it’s product sales, we really don’t have a lot of start-up costs. So if you look at each of them, Malaysia was an ongoing business for us, expand in China. We have a good presence in the South China Sea, so that was an expansion of business for us. So those types of contracts, there’s not a lot of start-up costs. If you talk about the Baroid with that oil where that was a 100% win for us previous quarter, there were a lot of start-up costs of new people, and Chris mentioned it in his comments, the mud plants expansion. So depending on which service line it is, there is some related start-up costs and in some cases, very minimal. But I think -- Roger Read - Natexis Bleichroeder: Is there any -- in terms of what you have seen in say the last two or three quarters and what you would expect through the back-half of ’07, is there reason to expect any change in that pace of start-up costs or is the business you are running today is pretty much what it ought to be in the foreseeable future? David J. Lesar: I think what we have is obviously our Eastern Hemisphere business continued to grow. We need to continue to invest in it. We see good opportunities and we believe that we will see margin expansion even as that growth continues but it would not go at -- that margin expansion would not be at the rate that it could be if we hadn’t and weren’t making the infrastructure upgrades, but we believe that those are very long-term investments and will be very long-term payoffs for us. So we believe we’ll have growth, continued costs but also some margin expansion. Roger Read - Natexis Bleichroeder: Thank you.

Thank you. Our next question or comment comes from the line of Scott Gill with Simmons & Company. Your line is open. Scott Gill - Simmons & Company: Thank you. Good morning. Chris, just real quick, I know you disclose this in your 10-Q but do you have the revenue and operating income for production optimization here for North America? C. Christopher Gaut: The margin for production optimization in North America? Scott Gill - Simmons & Company: Yes, the revenue and operating income? C. Christopher Gaut: Let’s see -- revenue for production optimization in North America, $877 million; and operating income, $101 million. Scott Gill - Simmons & Company: Okay, and I guess Andy, from an operational standpoint -- C. Christopher Gaut: Wait, I’m sorry. Hold on for a second. Sorry. I gave you the month. $266 million. That sounds a lot better -- $266 million of operating income. Scott Gill - Simmons & Company: 266? C. Christopher Gaut: 266. Scott Gill - Simmons & Company: And 877? C. Christopher Gaut: Yes, 30% operating margin, 44% incremental margin. Scott Gill - Simmons & Company: Okay. Thank you. Andy, on the Sperry business, can you talk a little bit about the top line growth in the U.S. market? Also, if you could give us some color on the non-North America top line growth at Sperry, what you are seeing there and what the big drivers are going forward?

If you think about Sperry’s business, a little more than 60% is Eastern Hemisphere and around 40% is the west. In the U.S. market, Scott, it really -- Sperry has taken advantage of the directional drilling expansions and the horizontal well activity and so that is a big driver for the growth here. We also have strong positions in Latin America, very strong in Brazil. And so those are the drivers. We were hurt, as everyone on the drilling side was hurt in Canada this quarter, but that will rebound nicely for the second-half for Sperry. So those are the drivers on the west. The east is really project-related. Lots of activity in the far east for Sperry. They are doing very well. Malaysia, Indonesia, Brunei, and then the Saudi project is doing extremely well for Sperry. And then we have our traditional markets both in the U.K. and Norway, doing very good, primarily in the U.K., and then we are expanding into West Africa with Sperry. So that’s the drivers for the east. Scott Gill - Simmons & Company: And the U.S. top line revenue growth for Sperry was about what this quarter? C. Christopher Gaut: For Sperry, the revenue growth? Scott Gill - Simmons & Company: Right. C. Christopher Gaut: 17% -- I’m sorry, about, no, about 10%. Scott Gill - Simmons & Company: 10% on a sequential basis, Chris? C. Christopher Gaut: I’m sorry, Sperry for Western Hemisphere? Scott Gill - Simmons & Company: I was actually looking for U.S. but -- C. Christopher Gaut: Yes, well, for U.S. -- it was 10% for North America, but Canada was way down so U.S. was substantially higher than that. Scott Gill - Simmons & Company: So it’s continued to go at a very rapid pace? C. Christopher Gaut: Yes. Scott Gill - Simmons & Company: All right. Thank you so much, gentlemen, and good quarter.

Thank you. Our next question or comment comes from the line of Brad Handler with Wachovia Capital Markets. Your line is open. Brad Handler - Wachovia Securities: Thanks. Good morning. A couple of I guess additional color or just tying in the segments versus geographies, please. So if there was 50 basis points of improvement in margin in Africa, Europe, Africa, CIS, it sounds like that was maybe constrained by the bulk plant going in in Norway. Were there some other factors that were one-time-ish in nature there? Just relatively low incrementals relative to what I might have expected.

Yes, we had a stim vessel that was not -- I guess was in the shipyard there in the Middle East. Another one with low utilization, and so stim vessels were low in Africa, rather, during the quarter. It was just a mix of things that with the incrementals, and Europe and Africa weren’t as high as in some other areas. Brad Handler - Wachovia Securities: Okay, and then if I ask the question in reverse, the Middle East and Asia, it sounds like if I were to guess the completion tool sales might have improved the margins in that region and that’s why you are maybe suggesting that -- so by implication you are suggesting maybe that trims back a bit in the third quarter? Is that right or are there some other factors that drove that margin a little higher than they are sustainably? C. Christopher Gaut: Drilling formation evaluation was a key factor for Middle East and Asia and that will -- we see that continuing. Completions are a bit lumpy and a lot of that was in the Middle East and Asia but as we are pointing to the trend there is one of increase in activity, increased volumes and very good margin overall but some lumpiness from quarter to quarter. Brad Handler - Wachovia Securities: Thanks and if I can steal another one, just a different direction, interesting to hear comments about the multi-service contracts in the U.S. Do you see a trend forming where there is more of that? Are you all driving that or are your competitors driving that relative to what we’ve seen recently? Just some additional color would be interesting. Thanks.

We’ve been driving that from a Halliburton perspective. The one Halliburton approach, trying to get the breadth of everything we have in the portfolio. It certainly differentiates us from many of the small competitors in the discrete business. So yes, that has been the approach and then sometimes we put together with the project management some drilling engineering services and consulting services with landmark on top of that bundle. But we have been promoting bundled packages of Halliburton and we will continue to do that. It’s very effective for us. Brad Handler - Wachovia Securities: Very good. Okay, thanks.

Thank you. Our next question or comment comes from the line of Jeff Tillery with Pickering Partners. Your line is open, sir. C. Christopher Gaut: And we’ll take one more question after this, Christopher. Jeff Tillery - Pickering Energy Partners: Good morning, guys. Just one quick question on international revenue base. Outside the positive lumps in the production optimization from completion tools, is there any reason to expect Q2 doesn’t form a good baseline to use going forward? David J. Lesar: No, with that caveat, no, we think that second quarter represents the progress that we’re making in building up our Eastern Hemisphere base, Jeff, yes. Jeff Tillery - Pickering Energy Partners: Okay, and then just one question on the U.S.; Andy, you talked about increasing revenues. As the month played out through the second quarter, did you see U.S. margins show that same upward trajectory or how did margins perform as the quarter progressed?

Yes, Jeff, the margins did improve going month-to-month in the second quarter. Utilization and optimizing the use of our assets is a huge driver for our profitability and so with the high activity level we saw in June and we’re seeing here in July, that’s a big driver for our profitability, yes. Jeff Tillery - Pickering Energy Partners: Thank you very much.

Thank you. Our final question or comment comes from the line of Geoff Kieburtz with Citigroup. Your line is open. Geoff B. Kieburtz - Citigroup: Thanks. Just a follow-up; with all the moving parts that we’ve already talked about in regard to North America, would it be fair to conclude that the margins in North America for the second quarter represent the low-end of what you expect for the future?

Well, Geoff, there are a lot of moving parts. We’re having a number of our divisions growing in North America, like our DFE groups. But on the whole, those tend to be lower margins than our stimulation business has been, so there’s a mix effect there. With the stim business itself, as we said we’re expecting that there could be further price deterioration but the volume and the utilization of our equipment is improving. So we are sorting all that out. Particularly with the mix effect, I think that could cause our average margins in the U.S. to decline, but from a dollar standpoint continue to grow. Geoff B. Kieburtz - Citigroup: But you do have the -- If I understood you correctly, Canada was a -- despite the fact that you took preemptive cost reduction actions, Canada was still a loss and you wouldn’t normally expect -- that’s a reversal that I think you fully expect to see, right? That’s why I was asking about North America in this case.

Yes, I was speaking more from the U.S. When you roll in the Canada piece, then that is a clear positive because Canada was a major deterrent, detractor from our overall North America. The Canada business, as we said, kind of -- but Canada itself is less than 10% of overall North America. Geoff B. Kieburtz - Citigroup: Right, so I mean, when we take into account Canada and all that, is -- I’ll just come back to my original question. I’m having a hard time, unless I’m misunderstanding something you are saying, seeing margins in North America going lower than what was posted in the second quarter.

That’s our objective, Geoff, yes. Geoff B. Kieburtz - Citigroup: Okay, and since I have the last question, let me just come back. I want to make sure I understood what Dave said earlier. I thought you said that you would expect to see incrementals in the Eastern Hemisphere continue in the 40% range. Was that correct? David J. Lesar: I don’t recall that we said that, Geoff. I don’t recall that we said that. Geoff B. Kieburtz - Citigroup: Can you tell me what you do expect incrementals to be then? David J. Lesar: We had very strong incrementals in several regions this quarter. The pricing leverage is not the big driver for our international growth. It’s activity and winning new contracts, so our thought is that on our Eastern Hemisphere growth, the incrementals are more likely to be close in the 30%, I would think is a more dependable number. The 40% is driven by the sharp recoveries that we’ve seen in certain markets but on a more sustainable basis where we don’t have a lot of pricing real pops here, but any long-term contracts, that’s probably a better guidepost. Geoff B. Kieburtz - Citigroup: And top line growth in the 20% to 25% range? David J. Lesar: We are certainly aiming 20%-plus for Eastern Hemisphere, yes. Geoff B. Kieburtz - Citigroup: Thanks very much.

That concludes our call for this morning. If anyone has further questions, please feel free to contact us directly. Thank you.

Thank you. Ladies and gentlemen, once again this does conclude today’s conference. We do thank you for your participation. You may all disconnect at this time. Good day.