Halliburton said it will restructure and may even sell its Kellogg, Brown and Root subsidiary, the business at the root of recent controversy.
KBR, an engineering and construction business, has come under scrutiny over contracts in Iraq and employee corruption in Nigeria.
Halliburton will decide on the future of KBR once it has settled the unit's $4.2bn (£3.2bn) asbestos claims bill.
It will favour a sale if the overhaul fails to boost the share price.
'Frustrating'
"We're looking for improvement in the near term," said Halliburton chief financial officer Chris Gaut.
"This is not something we can let go on and on. This is frustrating for us as a management team, frustrating for our shareholders."
Halliburton plans to pull together KBR's five units into two divisions, a move it forecasts will save it as much as $100m (£55m; 81m euros) a year.
The two divisions will cover energy and chemicals, the other government and infrastructure projects.
"This is a new KBR. We will be a streamlined, efficient and more profitable organisation", said KBR chief executive Andrew Lane.
Troubling business
The asbestos claims are the biggest financial headache facing KBR, which inherited the claims from Dresser Industries when it bought that firm five years ago.
But the claims are not the only embarrassment.
It is being investigated for over-charging the Pentagon on several military supply contracts.
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KBR'S MOUNTING PROBLEMS
Iraq : Investigation into over-charging for military contracts
United States : Facing $4.2bn asbestos claims bill
Nigeria : Investigation into alleged bribes on gas deals
Brazil : Major project over budget, costing firm $750m |
Halliburton, which was headed by US Vice-President Dick Cheney until he ran for office in 2000, has strenuously denied any wrongdoing with regard to the Iraqi contracts.
The company, in its defence, says it has become a lightning rod for political opposition to President Bush's Iraq policy.
It has been beset with problems in Nigeria too. Earlier this year, Halliburton severed ties with KBR ex-chairman Jack Stanley over allegations of financial impropriety.
KBR is being investigated by the US stock market regulator over allegations it paid bribes for Nigerian gas deals.
The Nigerian government has banned another Halliburton subsidiary, Halliburton Energy Services Nigeria, from state contracts after radiation-emitting equipment went missing.
Cost overruns on a Brazilian offshore project, Barracuda-Caratinga, have forced KBR to take charges of more than $750m in its accounts since 2002, but are now under control, the Wall Street Journal reported.
Halliburton's shares came within sight of a 12-month high on Thursday, but the group acknowledges that its stock is less-highly regarded as an investment proposition than that of its rivals.
Taking the price-to-earnings ratio, Halliburton's share price is 20.5 times earnings, whereas rivals can command 26.5 times, Mr Gaut said. The ratio measures what investors pay for the stock against what they can expect to pocket in dividends.
Halliburton has not set a deadline for a decision on whether to keep KBR. |
