Halliburton Fans Spy Opportunity in Iraq Crisis

Halliburton hasn't disclosed just how much it pays its Iraq-based employees to compensate them for the huge risks they face. But the Associated Press this week said the company has offered workers $80,000 tax-free -- and up to 50% more with overtime pay -- to spend a year in the country.

And the costs hardly end there. Yet another news agency, London-based Reuters, recently said that more than half of all expenses for companies operating in Iraq stem from protecting and insuring their workers there. Indeed, Reuters went on to say, life insurance premiums for particularly high-risk workers nearly doubled just last week, reaching $16,000 annually for a $200,000 policy.

Headline Risks

Yet to be honest, oil service analysts have yet to really dwell on the dangers in Iraq.

They talk about risks, of course, especially those associated with headline-prone Halliburton. But they tend to view the sector -- like the country it is rebuilding -- as a place of opportunity. Oil prices are high. Iraq is like a plugged-up faucet that's finally starting to gush. So for big service companies such as Halliburton and Schlumberger (SLB Quote), business has rarely looked better.

Granted, Halliburton has attracted some pretty ugly headlines. Some accounts claim that the company robbed American taxpayers by overcharging for gas deliveries to Kuwait in an effort to collect more on "cost-plus" contracts. They say Halliburton billed the Army for meals it never actually served to U.S. soldiers. They also insist that Halliburton won lucrative contracts in Iraq because of its ties to Vice President Dick Cheney -- the company's former CEO -- and sometimes skirted competitive bidding requirements in the process.

In fact, one analyst acknowledges, Halliburton has even been accused of wasting money on monogrammed towels that in some cases cost seven times as much as ordinary ones. But the analyst, Gary Russell of Stifel Nicolaus, last week shot down every one of those common complaints as mere myths.