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Bill Utt – Chairman, President, and CEO September 17, 2009 D.A. Davidson Eighth Annual E&C Conference

D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

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Page 1: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Bill Utt – Chairman, President, and CEO

September 17, 2009

D.A. Davidson Eighth Annual E&C Conference

Page 2: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Forward Looking StatementsThis presentation contains “forward-looking statements.” All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements include statements about the benefits of the split-off, the discussions of KBR’s business strategies and KBR’s expectations concerning future operations, profitability, liquidity and capital resources. You can generally identify forward-looking statements by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”“forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should” or other similar words. These statements relate to future events or future financial performance and involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to differ materially from those in the future that are implied by these forward-looking statements. Many of these factors cannot be controlled or predicted. These risks and other factors include those described under “Risk Factors” in KBR’s Annual Report on Form 10-K dated February 25, 2009, Forms 10-Q, recent Current Reports on Forms 8-K, and other Securities and Exchange Commission filings. Those factors, among others, could cause KBR’s actual results and performance to differ materially from the results and performance projected in, or implied by, the forward-looking statements. As you read and consider this presentation, you should carefully understand that the forward-looking statements are not guarantees of performance or results. KBR cautions you that assumptions, beliefs, expectations, intentions and projections about future events may and often do vary materially from actual results. Therefore, KBR cannot assure you that actual results will not differ materially from those expressed or implied by forward-looking statements.

The forward-looking statements included in this presentation are made only as of the date of this document. New risks and uncertainties arise from time to time, and KBR cannot predict those events or their impact. KBR assumes no obligation to update any forward-looking statements after the date of this presentation as a result of new information, future events or developments, except as required by the federal securities laws.

Page 3: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

KBR – A Leading Global E&C Provider

* For contracts that contain both fixed-price and cost-reimbursable components, KBR classifies the components as either fixed-price or cost-reimbursable according to the composition of the contract, except for smaller contracts that are characterized on the predominate component.

» Revenue: Full Year 2008 - $11.6 Billion; 2008 Fortune 500 Company #234First Half 2009 - $6.3 Billion vs. First Half 2008 - $5.2 Billion

» Backlog: 12/31/08 - $14.1 Billion (80% reimbursable / 20% fixed-price); June 30, 2009 - $12.3 Billion (79% reimbursable / 21% fixed-price)*

» Headquarters in Houston, Texas

» 100+ years of operating history

» ~57,000 employees; 45+ countries

» Extensive service capabilities:

• Engineering, procurement, construction, commissioning, and start-up (EPC-CS) to global oil, gas, petrochemical, and infrastructure customers

• Defense, logistics, and contingency support for defense services

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Page 4: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Our Aspiration: To be the world’s premier engineering, construction and services company

To safely deliver any project, any time, in any environment for the benefit of our customers, shareholders, employees and the communities we serve.

Uncompromising commitment to Health, Safety and Environment An open relationship with our employees based on mutual trust, respect and success Transparency, Accountability and Discipline in our business Best in class Risk Awareness Integrity in all we do Financial Responsibility to our stakeholders

Mission Values

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Page 5: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

KBR Operates in 45 Countries

Edmonton

Calgary

Houston

Monterrey

Arlington

MMM

GreenfordLeatherhead

Moscow

Atyrau

Baku

Dubai

CairoAlgiers

Angola

Lagos

Johannesburg

BaghdadKuwait City China

SingaporeJakarta

Perth

Brisbane

SydneyAdelaide Canberra

Melbourne

Gothenburg

Abu Dhabi

3

Dhahran

Page 6: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Hydrocarbons

Gas Monetization

Oil & Gas

Downstream

Technology

Page 7: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Gas Monetization – Solid Market

KBR Current Portfolio

EPCm – Gorgon LNG; Skikda LNG; Pearl GTL

EPC – Tangguh LNG; Yemen LNG; Escravos GTL

FEED – Inpex Ichthys LNG

Solid Market and Opportunities

Pluto Train 2

Segas Train 2

5

Gas Monetization provides pre-feasibility, front-end engineering and design (FEED), and engineering, procurement, and construction (EPC) and construction management (EPCm) services for large, complex liquefied natural gas and gas-to-liquids projects.

Page 8: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Gas Monetization – Gorgon LNG

Gorgon LNG Project Details

Kellogg Joint Venture Group (KJVG) – KBR led with 30% JV interest

AUD $2.7 billion EPCm services for KJVG (app. US $2.3 billion)

Three 5 MTPA LNG trains (modular construction strategy)

Gas processing and treatment facilities

Product storage and offloading

Complete off-sites, utilities, and accommodations

KBR to perform approximately 50% of project services, engineering, procurement, construction management, fabrication oversight, etc.

Reimbursable with incentives

Utilizes several fabrication yards across South East Asia and Australia

Implementation of “World Class” Quarantine plan for environmental sensitive area

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Page 9: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Oil and Gas – Growing Opportunities

KBR Current Portfolio

North Rankin 2 Platform

BP Chirag Oil Project

Chevron Jack/St. Malo

Chevron Lianzi

Pazflor FPSO Topsides

BP Quad 204 / West of Shetlands

Global Project Opportunities

Caspian, Asia Pacific, GOM, West Africa, North Sea, offshore Brazil

Granherne / GVA Consultancy 7

Oil and Gas provides field development, feasibility, and detailed engineering and design services for onshore and offshore production facilities and pipelines.

Page 10: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Downstream – From Prospects to Projects

KBR Current Portfolio and Prospects

Ras Tanura Integrated Project

Yanbu Export Refinery

PetroSA Coega Refinery FEED

Sonangol Lobito Refinery FEED

8

Downstream serves clients in the petrochemical, refining, coal gasification, and syngas markets, executing EPC projects and providing program management consultancy throughout the world.

Page 11: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Technology – A KBR Differentiator

KBR Technology Business Segment offers highly efficient, proprietary, and differentiated process technologies, some of which are the most efficient, value-added solutions available in the market for the coal monetization, petrochemical, refining and syngas markets.

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KBR Technology Portfolio

KAAPplus™ - Ammonia

SUPERFLEX™ - Olefins

ROSE© - Refining

SCORE™ - Ethylene

TRIG™ - Coal Gasification

Various Fluid Catalytic Cracking processes

Page 12: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Government, Defense & Infrastructure

U.S. Government and Defense

International Government and Defense

Global Infrastructure

Page 13: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

U.S. Government & Defense – Building on Experience

LogCAP III & IV

Current LogCAP III status

LogCAP IV transition status

Positive Trends On Litigation

Building on Experience

AFRICAP – logistics, engineering and life support services in Africa

AFCAP – LogCAP type work in Kuwait for U.S. Air Force

National Science Foundation – logistics support program in Antarctica 11

U.S. Government & Defense delivers on-demand support services, life sustainment services, and defense support infrastructure across the full military mission cycle and project program cycle for a diverse client base.

Page 14: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

KBR Current Portfolio

Allenby & Connaught

Australian Defence construction projects

CONLOG and TDA

Market Opportunities

U.K. MoD Afghanistan infrastructure projects

U.K. MoD integrated fuel supplies management program

Australian Defence Force program and construction management

Outsourced military support and training in friendly Gulf region

International Government & Defense

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International Government & Defense provides support and life sustainment services, and defense support infrastructure for Non-U.S. clients across the globe.

Page 15: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

KBR Current Portfolio

Qatar-Bahrain Causeway

Palm Island

Yas Island

Water projects

Australian infrastructure

Global road projects

Global Infrastructure – Design/Build Expertise

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Global Infrastructure serves diverse civil infrastructure markets, including recreational and commercial developments, transportation, waste and water treatment, and minerals throughout the world.

Page 16: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Power, Industrial and Commercial

Page 17: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Power

Increased bidding activity

Progress Energy Carolinas, Inc.

Solid Waste Authority of Palm Beach

Other projects in Georgia and Texas

Industrial and Commercial

Red River Activated Carbon plant

Facility operations and maintenance

Education and healthcare reasonably stable

Canadian Operations

Power, Industrial and Commercial

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Page 18: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

KBR Corporate

Page 19: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

2007 2008 2009

KBR – Strong Revenue Growth

Most business units reported improved revenue in first six months of 2009 compared to 2008:

Services up 388%

Downstream up 18%

Upstream up 17%

Technology up 2%

G&I down 3%

BE&K acquisition was the main contributor within the Services business unit

2007 2008 2009Six Months Ended June 30,

$4.2B

$5.2B

$6.3B

+ 24%

+ 22%

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Page 20: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

2007 2008 2009

KBR – Improving Job Income and Margins

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2007 2008 2009Six Months Ended June 30,

$348M

$457M

$539M

+ 31%

+ 18%

8% 9% 9%

* Note – Percentages represent job income margins

First quarter 2008 included $51 million gain on a favorable arbitration award

Job income growing with revenue

Margin improvement

Benefits from better profitable projects under new management

Zero or lower margin legacy projects completed or nearing completion

Enhanced focus on risk management and execution

Page 21: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

KBR – Quality of Earnings

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8% 9% 9%

Potential disallowed costs for U.S. contracts for Middle East work

Charges on Skopje Embassy in Macedonia in (multiple quarters)

Impairment charges on BRC joint venture in Algeria

Gain on sale of BRC joint venture in Algeria

Lease restructuring

U.K. Road project settlement

Charges on Skopje Embassy in Macedonia (multiple quarters)

PEMEX arbitration awards

Unfavorable jury verdict from ASCO litigation (partially reversed)

LNG reduction in profits on timing of change orders (later resolved)

FCPA charges

Increased costs on EBIC project due to equipment failure

Unfavorable arbitration decision related to the In Amenas project

FY 2007

FY 2008

First Half 2009

Page 22: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

2007 2008 20092007 2008 2009Quarter Ended June 30,

$9.6B

$12.6B$12.3B

+ 31%

- 2%

No material project cancellations;

Second quarter 2009 impacted by LogCAP III task order extension timing and usual project work-off

Improved portfolio mix* (cost reimbursable to fix priced)

Q209 – 79% / 21%; respectively

Q208 – 76% / 24%; respectively

Q207 – 71% / 29%; respectively

Solid Backlog & Portfolio Risk Profile

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Page 23: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

Prudent Financial Management & Focus

Returning Cash to Shareholders

Share repurchase program - $217 million since August 2008

Quarterly dividend – approximately $32 million per year

Balance Sheet Strength for Growth

Strong cash position - $1.1 billion as of June 2009

Debt free

Bonding capacity capabilities

Continued Focus on Cost Saving Initiatives

Scaling back costs through out organization

Lowered FY 2009 G&A – currently expect approximately $230 million for FY09

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Page 24: D.A. Davidson Eighth Annual E&C Conference · Health, Safety and Environment ... Gas Monetization – Gorgon LNG ¾Gorgon LNG Project Details ¾Kellogg Joint Venture Group (KJVG)

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