Halliburton 2015 Annual Report Download - page 32

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If we are not able to design, develop, and produce commercially competitive products and to implement
commercially competitive services in a timely manner in response to changes in the market, customer requirements,
competitive pressures, and technology trends, our business and consolidated results of operations could be materially and
adversely affected, and the value of our intellectual property may be reduced.
The market for our services and products is characterized by continual technological developments to provide better
and more reliable performance and services. If we are not able to design, develop, and produce commercially competitive
products and to implement commercially competitive services in a timely manner in response to changes in the market,
customer requirements, competitive pressures, and technology trends, our business and consolidated results of operations could
be materially and adversely affected, and the value of our intellectual property may be reduced. Likewise, if our proprietary
technologies, equipment, facilities, or work processes become obsolete, we may no longer be competitive, and our business and
consolidated results of operations could be materially and adversely affected.
If our customers delay paying or fail to pay a significant amount of our outstanding receivables, it could have a
material adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.
We depend on a limited number of significant customers. While none of these customers represented more than 10%
of consolidated revenue in any period presented, the loss of one or more significant customers could have a material adverse
effect on our business and our consolidated results of operations.
In most cases, we bill our customers for our services in arrears and are, therefore, subject to our customers delaying or
failing to pay our invoices. In weak economic environments, we may experience increased delays and failures due to, among
other reasons, a reduction in our customers’ cash flow from operations and their access to the credit markets. If our customers
delay paying or fail to pay us a significant amount of our outstanding receivables, it could have a material adverse effect on our
liquidity, consolidated results of operations, and consolidated financial condition.
Our business in Venezuela subjects us to actions by the Venezuelan government, the risk of delayed payments, and
currency risks, which could have a material adverse effect on our liquidity, consolidated results of operations, and
consolidated financial condition.
We believe there are risks associated with our operations in Venezuela, including the possibility that the Venezuelan
government could assume control over our operations and assets. Any delays in receiving payment on our receivables from our
primary customer in Venezuela or failure to pay us a significant amount of our outstanding receivables could have a material
adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.
The future results of our Venezuelan operations will be affected by many factors, including 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.