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Thu 17 May 2007 02:41 PM

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Protesters hold Halliburton 'goodbye party'

The Dubai-bound firm attempts to distance itself from KBR prior to its move to Dubai.

Halliburton Co. on Wednesday distanced itself from its former KBR Inc. unit, as the global oil services firm's chief executive told shareholders it was inappropriate for him to talk about the recently split-off engineering and construction company.

KBR, which is the Pentagon's largest contractor, became a separate company in April as part of Halliburton's plan to focus on its more profitable oil services business.

Over the years, KBR has drawn scrutiny from auditors, congressional Democrats and the U.S. Justice Department for the quality and pricing of its work for the U.S. Army.

"We no longer speak on behalf of KBR, nor is it appropriate for us to speak on behalf of KBR," Halliburton Chief Executive Officer David Lesar told a shareholder in response to a question about the engineering company.

Security was tight at the meeting held at a private resort 30 miles (50 km) north of Houston. Protesters were held in a fenced-off "free expression" zone. Before the meeting, about 20 demonstrators milled around, watched by a heavy police detail.

Katie Heim, with the Houston Global Awareness Collective, said the group was there to throw a goodbye party to Halliburton because it is moving its CEO to Dubai.

"It's getting a little bit too hard for them to do business in the United States," Heim said, adding that it would be easier for Halliburton to escape criticism and scrutiny in the Middle East.

Halliburton is a frequent target of critics and is often used as a punch-line for late-night television talk show jokes for the work KBR does in Iraq as well as its ties to U.S. Vice President Dick Cheney, who was CEO from 1995 to 2000.

When the company announced it was moving CEO Lesar to Dubai in March to win more contracts in the Eastern Hemisphere, U.S. politicians accused the company of turning its back on a government that had been the source of much of its business.

Speaking to reporters after the meeting, Lesar said he was leaving at the end of this week to move to Dubai, but that he would remain a U.S. citizen and taxpayer.

"I'm looking forward to it," he said of the move.

Lesar also said he expects his company's relationship with Venezuelan state oil company PDVSA to remain good.

"We are proud of that relationship and we expect it to continue," Lesar told shareholders.

Halliburton has about 1,000 employees in Venezuela, where President Hugo Chavez has nationalized U.S. oil projects in the Orinoco basin.

Lesar also told reporters after the meeting that he was "certainly more positive" about drilling markets in North America than he was in January and February, but cautioned that Canada would remain a struggle for the industry.

In April, when Halliburton reported its first-quarter results, it said lower-than-expected drilling activity in Canada and the U.S. Rocky Mountains hurt some segments of its business.

In March, the company warned that its first-quarter profit would fall below analysts' estimates due to decreased drilling activity in North America.

At a meeting later in the day, Halliburton's board of directors voted to raise its quarterly dividend 20 percent to 9 cents a share.

Halliburton also said its board reaffirmed its support of the ongoing $1.6 billion stock repurchase plan.

Shares of Halliburton climbed 4.6% to close at $35.59 on the New York Stock Exchange on Wednesday.

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