Halliburton 2013 Annual Report Download - page 29

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The future results of our Venezuelan operations will be affected by many factors, including our ability to take actions to
mitigate the effect of a devaluation of the Bolívar, the foreign currency exchange rate, actions of the Venezuelan government, and
general economic conditions such as continued inflation and future customer payments and spending. For further information,
see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Business Environment and
Results of Operations - International operations - Venezuela."
Some of our customers require bids for contracts in the form of long-term, fixed pricing contracts that may require
us to assume additional risks associated with cost over-runs, operating cost inflation, labor availability and productivity,
supplier and contractor pricing and performance, and potential claims for liquidated damages.
Some of our customers, primarily NOCs, may require bids for contracts in the form of long-term, fixed pricing contracts
that may require us to provide integrated project management services outside our normal discrete business to act as project
managers as well as service providers, and may require us to assume additional risks associated with cost over-runs. These
customers may provide us with inaccurate information in relation to their reserves, which is a subjective process that involves
location and volume estimation, that may result in cost over-runs, delays, and project losses. In addition, NOCs often operate in
countries with unsettled political conditions, war, civil unrest, or other types of community issues. These issues may also result in
cost over-runs, delays, and project losses.
Providing services on an integrated basis may also require us to assume additional risks associated with operating cost
inflation, labor availability and productivity, supplier pricing and performance, and potential claims for liquidated damages. We
rely on third-party subcontractors and equipment providers to assist us with the completion of these types of contracts. To the
extent that we cannot engage subcontractors or acquire equipment or materials in a timely manner and on reasonable terms, our
ability to complete a project in accordance with stated deadlines or at a profit may be impaired. If the amount we are required to
pay for these goods and services exceeds the amount we have estimated in bidding for fixed-price work, we could experience
losses in the performance of these contracts. These delays and additional costs may be substantial, and we may be required to
compensate our customers for these delays. This may reduce the profit to be realized or result in a loss on a project.
Constraints in the supply of, prices for, and availability of transportation of raw materials can have a material
adverse effect on our business and consolidated results of operations.
Raw materials essential to our business are normally readily available. High levels of demand for, or shortage of, raw
materials, such as proppants, hydrochloric acid, and gels, including guar gum, can trigger constraints in the supply chain of those
raw materials, particularly where we have a relationship with a single supplier for a particular resource. Many of the raw
materials essential to our business require the use of rail, storage, and trucking services to transport the materials to our jobsites.
These services, particularly during times of high demand, may cause delays in the arrival of or otherwise constrain our supply of
raw materials. These constraints could have a material adverse effect on our business and consolidated results of operations. In
addition, price increases imposed by our vendors for raw materials used in our business and the inability to pass these increases
through to our customers could have a material adverse effect on our business and consolidated results of operations.
Our acquisitions, dispositions, and investments may not result in anticipated benefits and may present risks not
originally contemplated, which may have a material adverse effect on our liquidity, consolidated results of operations, and
consolidated financial condition.
We continually seek opportunities to maximize efficiency and value through various transactions, including purchases
or sales of assets, businesses, investments, or joint ventures. These transactions are intended to (but may not) result in the
realization of savings, the creation of efficiencies, the offering of new products or services, the generation of cash or income, or
the reduction of risk. Acquisition transactions may be financed by additional borrowings or by the issuance of our common
stock. These transactions may also affect our liquidity, consolidated results of operations, and consolidated financial condition.
These transactions also involve risks, and we cannot ensure that:
- any acquisitions would result in an increase in income or provide an adequate return of capital or other anticipated
benefits;
- any acquisitions would be successfully integrated into our operations and internal controls;
- the due diligence conducted prior to an acquisition would uncover situations that could result in financial or legal
exposure, including under the FCPA, or that we will appropriately quantify the exposure from known risks;
- any disposition would not result in decreased earnings, revenue, or cash flow;
- use of cash for acquisitions would not adversely affect our cash available for capital expenditures and other uses;
- any dispositions, investments, acquisitions, or integrations would not divert management resources; or
- any dispositions, investments, acquisitions, or integrations would not have a material adverse effect on our liquidity,
consolidated results of operations, or consolidated financial condition.