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 Dresser Industries, Inc.


                                STOCK OPTION AGREEMENT


     This STOCK OPTION AGREEMENT is dated as of February 25, 1998 by and between
Dresser Industries, Inc., a Delaware corporation (the "Company"), and
Halliburton Company, a Delaware corporation (the "Grantee").

                                      RECITALS:

     The Grantee, the Company and Newco propose to enter into a Merger 
Agreement providing, among other things, for the Merger pursuant to the 
Merger Agreement of Newco with and into the Company which shall be the 
surviving corporation.

     As a condition and inducement to the Grantee's willingness to enter into 
the Merger Agreement, the Grantee has requested that the Company agree, and 
the Company has agreed, to grant the Grantee the Option.

     The Board of Directors of the Company has approved the Merger Agreement, 
the Merger and this Agreement and has recommended approval of the Merger 
Agreement by the holders of Company Common Stock.

     The Board of Directors of the Grantee has approved the Merger Agreement, 
the Merger and this Agreement and has recommended approval of the Charter 
Amendment and the Share Issuance by the holders of Parent Common Stock.

     NOW, THEREFORE, in consideration of the foregoing and the respective 
representations, warranties, covenants and agreements set forth herein and in 
the Merger Agreement, the Company and the Grantee agree as follows:

     1.   CAPITALIZED TERMS.  Those capitalized terms used but not defined 
herein that are defined in the Merger Agreement are used herein with the same 
meanings as ascribed to them therein; PROVIDED, HOWEVER, that, as used in 
this Agreement, "Person" shall have the meaning specified in Sections 3(a)(9) 
and 13(d)(3) of the Exchange Act.  Those capitalized terms used in this 
Agreement that are not defined in the Merger Agreement are defined in Annex A 
hereto and are used herein with the meanings ascribed to them therein.

     2.   THE OPTION.    

          (a)  GRANT OF OPTION.  Subject to the terms and conditions set forth
     herein, the Company hereby grants to the Grantee an irrevocable option to
     purchase, out of the authorized but unissued Company Common Stock,
     26,321,994 shares of Company Common Stock (as adjusted as set forth herein)
     (the "Option Shares"), at the Exercise Price.

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          (b)  EXERCISE PRICE.  The exercise price (the "Exercise Price") of the
     Option shall be the lesser of (i) $44.00 per Option Share and (ii) the
     Common Stock Exchange Ratio multiplied by the Closing Price of the Company
     Common Stock on the date of exercise of the Option.

          (c)  TERM.  The Option shall be exercisable at any time and from time
     to time following the occurrence of an Exercise Event and shall remain in
     full force and effect until the earliest to occur of (i) the Effective
     Time, (ii) the first anniversary of the receipt by Grantee of written
     notice from the Company of the occurrence of an Exercise Event and (iii)
     termination of the Merger Agreement in accordance with its terms prior to
     the occurrence of an Exercise Event (the "Option Term"); PROVIDED, HOWEVER,
     that the Option Term shall be extended until the commencement of the Put
     Period if, at the end of the Option Term, the events described in clauses
     (i), (ii) and (iii) of Section 9.05(d) of the Merger Agreement have
     transpired and the acceptance or agreement referenced in clause (iii) of
     such Section 9.05(d) has not been terminated prior to consummation of the
     transactions contemplated thereby.  If so extended, the Option Term shall
     expire contemporaneously with any termination of the acceptance or
     agreement referenced in clause (iii) of such Section 9.05(d).  If the
     Option is  not theretofore exercised, the  rights and obligations set forth
     in this Agreement shall terminate at the expiration of the Option Term.

          (d)  EXERCISE OF OPTION. The Grantee may exercise the Option, in whole
     or in part, at any time and from time to time during the Option Term.
     Notwithstanding the expiration of the Option Term, the Grantee shall be
     entitled to purchase those Option Shares with respect to which it has
     exercised the Option in accordance with the terms hereof prior to the
     expiration of the Option Term.

               (i)  If the Grantee wishes to exercise the Option, it shall send
          a written notice (an "Exercise Notice") (the date of which being
          herein referred to as the "Notice Date") to the Company specifying (i)
          the total number of Option Shares it intends to purchase pursuant to
          such exercise and (ii) a place and a date (the "Closing Date") not
          earlier than three (3) Business Days nor later than 15 Business Days
          from the Notice Date for the closing of the purchase and sale pursuant
          to the Option (the "Closing"). 

               (ii) If the Closing cannot be effected by reason of the
          application of any Law, Regulation or Order, the Closing Date shall be
          extended to the tenth Business Day following the expiration or
          termination of the restriction imposed by such Law, Regulation or
          Order.  Without limiting the foregoing, if prior notification to, or
          Authorization of, any Governmental Authority is required in connection
          with the purchase of such Option Shares by virtue of the application
          of such Law, Regulation or Order, the Grantee and, if applicable, the
          Company shall promptly file the required notice or application for
          Authorization and the Grantee, with the cooperation of the Company,
          shall expeditiously process the same.

                             STOCK OPTION AGREEMENT
                                       -2-
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               (iii)     Notwithstanding Section 2(d)(ii), if the Closing Date
          shall not have occurred within nine months after the related Notice
          Date as a result of one or more restrictions imposed by the
          application of any Law, Regulation or Order, the exercise of the
          Option effected on the Notice Date shall be deemed to have expired. 

          (e)  PAYMENT AND DELIVERY OF CERTIFICATES.

               (i)  At each Closing, the Grantee shall pay to the Company in
          immediately available funds by wire transfer to a bank account
          designated by the Company an amount equal to the Exercise Price
          multiplied by the Option Shares to be purchased on such Closing Date.

               (ii) At each Closing, simultaneously with the delivery of
          immediately available funds as provided in Section 5(a), the Company
          shall deliver to the Grantee a certificate or certificates
          representing the Option Shares to be purchased at such Closing, which
          Option Shares shall be duly authorized, validly issued, fully paid and
          nonassessable and free and clear of all Liens, and the Grantee shall
          deliver to the Company its written agreement that the Grantee will not
          offer to sell or otherwise dispose of such Option Shares in violation
          of applicable Law or the provisions of this Agreement.

          (f)  CERTIFICATES.   Certificates for the Option Shares delivered at
     each Closing shall be endorsed with a restrictive legend that shall read
     substantially as follows:

               THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
               SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF
               1933, AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK
               OPTION AGREEMENT DATED AS OF FEBRUARY 25, 1998.  A COPY OF
               SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
               CHARGE UPON RECEIPT BY THE COMPANY OF A WRITTEN REQUEST
               THEREFOR.

     A new certificate or certificates evidencing the same number of shares of
     the Company Common Stock will be issued to the Grantee in lieu of the
     certificate bearing the above legend, and such new certificate shall not
     bear such legend, insofar as it applies to the Securities Act, if the
     Grantee shall have delivered to the Company a copy of a letter from the
     staff of the Commission, or an opinion of counsel in form and substance
     reasonably satisfactory to the Company and its counsel, to the effect that
     such legend is not required for purposes of the Securities Act.

          (g)  If at the time of issuance of any Company Common Stock pursuant
     to any exercise of the Option, the Company shall have issued any share
     purchase rights or similar securities to holders of Company Common Stock,
     then each Option Share purchased 

                             STOCK OPTION AGREEMENT
                                       -3-
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     pursuant to the Option shall also include rights with terms 
     substantially the same as and at least as favorable to the Grantee
     as those issued to other holders of Company Common Stock.

     3.   ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.

          (a)  In the event of any change in the Company Common Stock by reason
     of a stock dividend, split-up, combination, recapitalization, exchange of
     shares or similar transaction, the type and number of shares or securities
     subject to the Option, and the Exercise Price therefor, shall be adjusted
     appropriately, and proper provision shall be made in the agreements
     governing such transaction, so that the Grantee shall receive upon exercise
     of the Option the same class and number of outstanding shares or other
     securities or property that Grantee would have received in respect of the
     Company Common Stock if the Option had been exercised immediately prior to
     such event, or the record date therefor, as applicable.  

          (b)  If any additional shares of Company Common Stock are issued after
     the date of this Agreement (other than pursuant to an event described
     Section 3(a) above), the number of shares of Company Common Stock then
     remaining subject to the Option shall be adjusted so that, after such
     issuance of additional shares, such number of shares then remaining subject
     to the Option, together with shares theretofore issued pursuant to the
     Option, equals 15% of the number of shares of Company Common Stock then
     issued and outstanding; PROVIDED, HOWEVER, that the number of shares of
     Company Common Stock subject to the Option shall only be increased to the
     extent the Company then has available authorized but unissued and
     unreserved shares of Company Common Stock.
          
          (c)  To the extent any of the provisions of this Agreement apply to
     the Exercise Price, they shall be deemed to refer to the Exercise Price as
     adjusted pursuant to this Section 3.

     4.   RETENTION OF BENEFICIAL OWNERSHIP.  To the extent that the Grantee 
shall exercise the Option, the Grantee shall, unless the Grantee shall 
exercise the Put Right or the Alternative Put Right or the Company shall 
exercise the Call Right or the Alternative Call Right, retain Beneficial 
Ownership of the shares of Company Common Stock so acquired through the later 
of the end of the Call Period or the end of the Alternative Call Period.

     5.   REPURCHASE AT THE OPTION OF GRANTEE.

          (a)  At the request of the Grantee made at any time during a period of
     sixty (60) days after the termination fee for which provision is made in
     Section 9.05(d) of the Merger Agreement becomes payable (the "Put Period"),
     the Company (or any successor thereto) shall, at the election of the
     Grantee (the "Put Right"), repurchase from the Grantee (i) all or any
     portion of the Option that then remains unexercised (or as to which the
     Option has been exercised but the Closing has not occurred) and (ii) all or
     any portion of the shares of Company Common Stock purchased by the Grantee
     pursuant hereto and with respect to 

                             STOCK OPTION AGREEMENT
                                       -4-
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     which the Grantee then has Beneficial Ownership.  The date on which the 
     Grantee exercises its rights under this Section 4 is referred to as the 
     "Put Date."  Such repurchase shall be at an aggregate price (the "Put 
     Consideration") equal to the sum of:

               (i)  the aggregate Exercise Price paid by the Grantee for any
          Option Shares which the Grantee owns and as to which the Grantee is
          exercising the Put Right;

               (ii) the excess, if any, of the Applicable Price over the
          Exercise Price paid by the Grantee for each Option Share as to which
          the Grantee is exercising the Put Right multiplied by the number of
          such shares; and

               (iii)     the excess, if any, of (x) the Applicable Price for
          each share of Company Common Stock over (y) the Exercise Price
          multiplied by the number of Unexercised Option Shares as to which the
          Grantee is exercising the Put Right. 
          
          (b)  At the request of the Grantee made at any time after the first
     Exercise Event and ending on the First Anniversary of the Notice Date (the
     "Alternative Put Period"), the Company (or any successor thereto) shall, at
     the election of the Grantee (the "Alternative Put Right"), repurchase from
     the Grantee all or any portion of the shares of Company Common Stock
     purchased by the Grantee pursuant hereto and with respect to which the
     Grantee then has Beneficial Ownership.  The date on which the Grantee
     exercises its rights under this Section 4 is referred to as the
     "Alternative Put Date."  Such repurchase shall be at an aggregate price
     (the "Alternative Put Consideration") equal to the Exercise Price
     multiplied by the number of shares of Company Common Stock so purchased by
     the Company and for which the Alternative Put Right has been exercised.

          (c)  If the Grantee exercises its rights under this Section 4, the
     Company shall, within five Business Days after the Put Date or the
     Alternative Put Period, pay the Put Consideration or the Alternative Put
     Consideration, as the case may be, to the Grantee in immediately available
     funds, and the Grantee shall surrender to the Company the Option or portion
     of the Option and the certificates evidencing the shares of Company Common
     Stock purchased thereunder.  The Grantee shall warrant to the Company that,
     immediately prior to the repurchase thereof pursuant to this Section 4, the
     Grantee had sole record and Beneficial Ownership of the Option or such
     shares, or both, as the case may be, and that the Option or such shares, or
     both, as the case may be, were then held free and clear of all Liens.

          (d)  If the Option has been exercised, in whole or in part, as to any
     Option Shares subject to the Put Right or the Alternative Put Right but the
     Closing thereunder has not occurred, the payment of the Put Consideration
     or the Alternative Put Consideration shall, to that extent, render such
     exercise null and void.

          (e)  Notwithstanding any provision to the contrary in this Agreement,
     the Grantee may not exercise its rights pursuant to this Section 4 in a
     manner that would result in the cash 

                             STOCK OPTION AGREEMENT
                                       -5-
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     payment to the Grantee of an aggregate amount under this Section 4 of more
     than $225 million, including the amount, if any, paid to the Grantee 
     pursuant to Section 9.05 of the Merger Agreement; PROVIDED, HOWEVER, that 
     nothing in this sentence shall limit the Grantee's ability to exercise the
     Option in accordance with its terms.

     6.   REPURCHASE AT THE OPTION OF THE COMPANY.

          (a)  To the extent the Grantee shall not have previously exercised its
     rights under Section 5, at the request of the Company made at any time
     during the sixty (60) day period commencing at the expiration of the Put
     Period (the "Call Period"), the Company may repurchase from the Grantee,
     and the Grantee shall sell, or cause to be sold, to the Company, all (but
     not less than all) of the shares of Company Common Stock acquired by the
     Grantee pursuant hereto and with respect to which the Grantee has
     Beneficial Ownership (other than Beneficial Ownership derived solely from
     the power to vote or direct the voting of such Company Common Stock) at the
     time of such repurchase at a price per share equal to the greater of
     (A) the Current Market Price and (B) the Exercise Price per share in
     respect of the shares so acquired (such price per share multiplied by the
     number of shares of Company Common Stock to be repurchased pursuant to this
     Section 6 being herein called the "Call Consideration").  The date on which
     the Company exercises its rights under this Section 6 is referred to as the
     "Call Date."  

          (b)  If (x) at the end  of the Option Term (without giving effect to
     any extension thereof) not all the events described in clauses (i), (ii)
     and (iii) of Section 9.05(d) of the Merger Agreement have occurred or, (y)
     if at the end of the Option Term (including giving effect to any extension
     thereof) all the events referred to in clause (x) have occurred but the
     acceptance or agreement referenced in clause (iii) of such Section 9.05(d)
     has been terminated without consummation of the transactions contemplated
     thereby, then,  at the request of the Company made at any time during the
     sixty (60) day period commencing at the expiration of the Alternative Put
     Period (the "Alternative Call Period"), the Company may repurchase from the
     Grantee, and the Grantee shall sell, or cause to be sold, to the Company,
     all (but not less than all) of the shares of Company Common Stock acquired
     by the Grantee pursuant hereto and with respect to which the Grantee has
     Beneficial Ownership (other than Beneficial Ownership derived solely from
     the power to vote or direct the voting of such Company Common Stock) at the
     time of such repurchase at a price per share equal to the Exercise Price
     per share in respect of the shares so acquired (such price per share
     multiplied by the number of shares of Company Common Stock to be
     repurchased pursuant to this Section 6 being herein called the "Alternative
     Call Consideration").  The date on which the Company exercises its rights
     under this Section 6 is referred to as the "Alternative Call Date."  
     
          (c)  If the Company exercises its rights under this Section 6, the
     Company shall, within five Business Days pay the Call Consideration in
     immediately available funds, and the Grantee shall surrender to the Company
     certificates evidencing the shares of Company Common Stock purchased
     hereunder, and the Grantee shall warrant to the Company that, 

                             STOCK OPTION AGREEMENT
                                       -6-
<PAGE>

     immediately prior to the repurchase thereof pursuant to this Section 6, the
     Grantee had sole record and Beneficial Ownership of such shares and that 
     such shares were then held free and clear of all Liens.

          7.   REGISTRATION RIGHTS.  

          (a)  The Company shall, if requested by the Grantee at any time and
     from time to time during the Registration Period, as expeditiously as
     practicable, prepare, file and cause to be made effective up to two
     registration statements under the Securities Act if such registration is
     required in order to permit the offering, sale and delivery of any or all
     shares of Company Common Stock or other securities that have been acquired
     by or are issuable to the Grantee upon exercise of the Option in accordance
     with the intended method of sale or other disposition stated by the
     Grantee, including, at the sole discretion of the Company, a "shelf"
     registration statement under Rule 415 under the Securities Act or any
     successor provision, and the Company shall use all reasonable efforts to
     qualify such shares or other securities under any applicable state
     securities laws.  The Company shall use all reasonable efforts to cause
     each such registration statement to become effective, to obtain all
     consents or waivers of other parties that are required therefor and to keep
     such registration statement effective for such period not in excess of 180
     days from the day such registration statement first becomes effective as
     may be reasonably necessary to effect such sale or other disposition.  The
     obligations of the Company hereunder to file a registration statement and
     to maintain its effectiveness may be suspended for one or more periods of
     time not exceeding 60 days in the aggregate if the Board of Directors of
     the Company shall have determined in good faith that the filing of such
     registration or the maintenance of its effectiveness would require
     disclosure of nonpublic information that would materially and adversely
     affect the Company.  For purposes of determining whether two requests have
     been made under this Section 7, only requests relating to a registration
     statement that has become effective under the Securities Act and pursuant
     to which the Grantee has disposed of all shares covered thereby in the
     manner contemplated therein shall be counted.

          (b)  The Registration Expenses shall be for the account of the
     Company; PROVIDED, HOWEVER, that the Company shall not be required to pay
     any Registration Expenses with respect to such registration if the
     registration request is subsequently withdrawn at the request of the
     Grantee unless the Grantee agrees to forfeit its right to request one
     registration; and PROVIDED FURTHER, that, if at the time of such withdrawal
     the Grantee has learned of a material adverse change in the results of
     operations, condition (financial or other), business or prospects of the
     Company as compared with the information known to the Grantee at the time
     of its request and has withdrawn the request with reasonable promptness
     following disclosure by the Company of such material adverse change, then
     the Grantee shall not be required to pay any of such Registration Expenses
     and shall retain all remaining rights to request registration.  

          (c)  The Grantee shall provide all information reasonably requested by
     the Company for inclusion in any registration statement to be filed
     hereunder.  If during the 

                             STOCK OPTION AGREEMENT
                                       -7-
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     Registration Period the Company shall propose to register under the 
     Securities Act the offering, sale and delivery of Company Common Stock for 
     cash for its own account or for any other stockholder of the Company 
     pursuant to a firm underwriting, it shall, in addition to the Company's 
     other obligations under this Section 7, allow the Grantee the right to 
     participate in such registration provided that the Grantee participates in 
     the underwriting; PROVIDED, HOWEVER, that, if the managing underwriter of 
     such offering advises the Company in writing that in its opinion the number
     of shares of Company Common Stock requested to be included in such 
     registration exceeds the number that can be sold in such offering, the 
     Company shall, after fully including therein all securities to be sold by 
     the Company, include the shares requested to be included therein by Grantee
     pro rata (based on the number of shares intended to be included therein) 
     with the shares intended to be included therein by Persons other than the 
     Company.  

          (d)  In connection with any offering, sale and delivery of Company
     Common Stock pursuant to a registration statement effected pursuant to this
     Section 7, the Company and the Grantee shall provide each other and each
     underwriter of the offering with customary representations, warranties and
     covenants, including covenants of indemnification and contribution.

     8.   FIRST REFUSAL.  Subject to the provisions of Section 4 herein, at 
any time after the first occurrence of an Exercise Event and prior to the 
second anniversary of the first purchase of shares of Company Common Stock 
pursuant to the Option, if the Grantee shall desire to sell, assign, transfer 
or otherwise dispose of all or any of the Option Shares or other securities 
acquired by it pursuant to the Option, it shall give the Company written 
notice of the proposed transaction (an "Offeror's Notice"), identifying the 
proposed transferee, accompanied by a copy of a binding offer to purchase 
such shares or other securities signed by such transferee and setting forth 
the terms of the proposed transaction.  An Offeror's Notice shall be deemed 
an offer by the Grantee to the Company, which may be accepted, in whole but 
not in part, within ten Business Days of the receipt of such Offeror's 
Notice, on the same terms and conditions and at the same price at which the 
Grantee is proposing to transfer such shares or other securities to such 
transferee.  The purchase of any such shares or other securities by the 
Company shall be settled within ten Business Days of the date of the 
acceptance of the offer and the purchase price shall be paid to the Grantee 
in immediately available funds.  If the Company shall fail or refuse to 
purchase all the shares or other securities covered by an Offeror's Notice, 
the Grantee may, within 60 days from the date of the Offeror's Notice, sell 
all, but not less than all, of such shares or other securities to the 
proposed transferee at no less than the price specified and on terms no more 
favorable than those set forth in the Offeror's Notice; PROVIDED, HOWEVER, 
that the provisions of this sentence shall not limit the rights the Grantee 
may otherwise have if the Company has accepted the offer contained in the 
Offeror's Notice and wrongfully refuses to purchase the shares or other 
securities subject thereto.  The requirements of this Section 8 shall not 
apply to (a) any disposition as a result of which the proposed transferee 
would own beneficially not more than 2% of the outstanding voting power of 
the Company, (b) any disposition of Company Common Stock or other securities 
by a Person to whom the Grantee has assigned its rights under the Option with 
the consent of the Company, (c) any sale by means of a 

                             STOCK OPTION AGREEMENT
                                       -8-
<PAGE>

public offering registered under the Securities Act or (d) any transfer to a 
wholly owned Subsidiary of the Grantee which agrees in writing to be bound by 
the terms hereof.

     9.   PROFIT LIMITATION.

          (a)  Notwithstanding any other provision of this Agreement, in no
     event shall the Grantee's Total Profit exceed $225 million and, if it
     otherwise would exceed such amount, the Grantee, at its sole election,
     shall either (i) deliver to the Company for cancellation Option Shares
     previously purchased by Grantee, (ii) pay cash or other consideration to
     the Company or (iii) undertake any combination thereof, so that the
     Grantee's Total Profit shall not exceed $225 million after taking into
     account the foregoing actions.

          (b)  Notwithstanding any other provision of this Agreement, this Stock
     Option may not be exercised for a number of Option shares that would, as of
     the Notice Date, result in a Notional Total Profit of more than $225
     million, and, if exercise of the Option otherwise would exceed such amount,
     the Grantee, at its sole option, may increase the Exercise Price for that
     number of Option Shares set forth in the Exercise Notice so that the
     Notional Total Profit shall not exceed $225 million; PROVIDED,  HOWEVER,
     that nothing in this sentence shall restrict any exercise of the Option
     otherwise permitted by this Section 9(b) on any subsequent date at the
     Exercise Price set forth in Section 2(b).

     10.  LISTING.  If the Company Common Stock or any other securities then 
subject to the Option are then listed on the New York Stock Exchange, the 
Company, upon the occurrence of an Exercise Event, will promptly file an 
application to list on the New York Stock Exchange the shares of the Company 
Common Stock or other securities then subject to the Option and will use all 
reasonable efforts to cause such listing application to be approved as 
promptly as practicable.

     11.  REPLACEMENT OF AGREEMENT.  Upon receipt by the Company of evidence 
reasonably satisfactory to it of the loss, theft, destruction or mutilation 
of this Agreement, and (in the case of loss, theft or destruction) of 
reasonably satisfactory indemnification, and upon surrender and cancellation 
of this Agreement, if mutilated, the Company will execute and deliver a new 
Agreement of like tenor and date.  Any such new Agreement shall constitute an 
additional contractual obligation of the Company, whether or not the 
Agreement so lost, stolen, destroyed or mutilated shall at any time be 
enforceable by anyone.

          12.  MISCELLANEOUS.

          (a)  EXPENSES.  Except as otherwise provided in the Merger Agreement
     or as otherwise expressly provided herein, each of the parties hereto shall
     bear and pay all costs and expenses incurred by it or on its behalf in
     connection with the transactions contemplated hereunder, including fees and
     expenses of its own financial consultants, investment bankers, accountants
     and counsel.

                             STOCK OPTION AGREEMENT
                                       -9-
<PAGE>

          (b)  WAIVER AND AMENDMENT.  Any provision of this Agreement may be
     waived at any time by the party that is entitled to the benefits of such
     provision.  This Agreement may not be modified, amended, altered or
     supplemented except upon the execution and delivery of a written agreement
     executed by the parties hereto.

          (c)  ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARY; SEVERABILITY. 
     Except as otherwise set forth in the Merger Agreement, this Agreement
     (including the Merger Agreement and the other documents and instruments
     referred to herein and therein) (i) constitutes the entire agreement and
     supersedes all prior agreements and understandings, both written and oral,
     including without limitation any conflicting provisions of the
     Confidentiality Agreement, between the parties with respect to the subject
     matter hereof and (ii) is not intended to confer upon any Person other than
     the parties hereto any rights or remedies hereunder. 

          (d)  SEVERABILITY.  If any term or other provision of this Agreement
     is invalid, illegal or incapable of being enforced by any rule of law or
     public policy, all other conditions and provisions of this Agreement shall
     nevertheless remain in full force and effect so long as the economic or
     legal substance of the transactions contemplated hereby is not affected in
     any manner materially adverse to any party.  Upon such determination that
     any term or other provision is invalid, illegal or incapable of being
     enforced, the parties hereto shall negotiate in good faith to modify this
     Agreement so as to effect the original intent of the parties as closely as
     possible in an acceptable manner to the end that transactions contemplated
     hereby are fulfilled to the extent possible.

          (e)  GOVERNING LAW.  This Agreement shall be governed by, and
     construed in accordance with, the Laws of the State of Delaware, regardless
     of the Laws that might otherwise govern under applicable principles of
     conflicts of law.

          (f)  DESCRIPTIVE HEADINGS.  The descriptive headings contained herein
     are for convenience or reference only and shall not affect in any way the
     meaning or interpretation of this Agreement.

          (g)  NOTICES.  All notices and other communications hereunder shall be
     in writing and shall be deemed given if delivered personally, telecopied
     (with confirmation) or mailed by registered or certified mail (return
     receipt requested) to the parties at the following addresses or sent by
     electronic transmission to the telecopier number specified below:

          If to the Company to:

               Dresser Industries, Inc.
               2001 Ross Avenue
               Dallas, Texas  75221
               Attention:  Clint Ables
               Telecopier No.:  (214) 740-6904

                             STOCK OPTION AGREEMENT
                                       -10-
<PAGE>

          with a copy to:

               Weil, Gotshal & Manges LLP
               767 Fifth Avenue
               New York, New York 10153
               Attention:  Dennis J. Block
               Telecopier No.: (212) 310-8007

          If to Grantee to:

               Halliburton Company
               3600 Lincoln Plaza
               500 North Akard
               Dallas, Texas  75201-3391
               Attention:  Lester L. Coleman
                     Executive Vice President and General Counsel
               Telecopier No.:  (214) 978-2658

          with a copy to:

               Vinson & Elkins L.L.P.
               2300 First City Tower
               1001 Fannin Street
               Houston, Texas  77002-6760
               Attention:  William E. Joor III
               Telecopier No.:  (713) 615-5201

          (h)  COUNTERPARTS.  This Agreement and any amendments hereto may be
     executed in counterparts, each of which shall be deemed an original and all
     of which taken together shall constitute but a single document.

          (i)  ASSIGNMENT.  Neither this Agreement nor any of the rights,
     interests or obligations hereunder or under the Option shall be assigned by
     either of the parties hereto (whether by operation of law or otherwise)
     without the prior written consent of the other party, except that the
     Grantee may assign this Agreement to a wholly owned Subsidiary of the
     Grantee; PROVIDED, HOWEVER, that no such assignment shall have the effect
     of releasing the Grantee from its obligations hereunder.  Subject to the
     preceding sentence, this Agreement shall be binding upon, inure to the
     benefit of and be enforceable by the parties and their respective
     successors and assigns.

          (j)  FURTHER ASSURANCES.  In the event of any exercise of the Option
     by the Grantee, the Company and the Grantee shall execute and deliver all
     other documents and instruments and take all other action that may be
     reasonably necessary in order to consummate the transactions provided for
     by such exercise.

                             STOCK OPTION AGREEMENT
                                       -11-
<PAGE>

          (k)  SPECIFIC PERFORMANCE.  The parties hereto hereby acknowledge and
     agree that the failure of any party to this Agreement to perform its
     agreements and covenants hereunder will cause irreparable injury to the
     other party to this Agreement for which damages, even if available, will
     not be an adequate remedy.  Accordingly, each of the parties hereto hereby
     consents to the granting of equitable relief (including specific
     performance and injunctive relief) by any court of competent jurisdiction
     to enforce any party's obligations hereunder. The parties further agree to
     waive any requirement for the securing or posting of any bond in connection
     with the obtaining of any such equitable relief and that this provision is
     without prejudice to any other rights that the parties hereto may have for
     any failure to perform this Agreement.


                             STOCK OPTION AGREEMENT
                                       -12-
<PAGE>

     IN WITNESS WHEREOF, the Company and the Grantee have caused this Stock 
Option Agreement to be signed by their respective officers thereunto duly 
authorized, all as of the day and year first written above.


                                       DRESSER INDUSTRIES, INC.


                                       By:
                                          -------------------------------------



                                       HALLIBURTON COMPANY


                                       By:
                                          -------------------------------------



                             STOCK OPTION AGREEMENT
                                       -13-
<PAGE>

                                                                        ANNEX A

                              SCHEDULE OF DEFINED TERMS

     The following terms when used in the Stock Option Agreement shall have 
the meanings set forth below unless the context shall otherwise require:

     "Agreement" shall mean this Stock Option Agreement.

     "Alternative Call Consideration" shall have the meaning ascribed to such 
term in Section 6(b).

     "Alternative Call Date" shall have the meaning ascribed to such term in 
Section 6(b).

     "Alternative Call Period" shall have the meaning ascribed to such term 
in Section 6(b).

     "Alternative Call Right" shall have the meaning ascribed to such term in 
Section 6(b).

     "Alternative Put Consideration" shall have the meaning ascribed to such 
term in Section 5(b).

     "Alternative Put Date" shall have the meaning ascribed to such term in 
Section 5(b).

     "Alternative Put Period" shall have the meaning ascribed to such term in 
Section 5(b).

     "Alternative Put Right" shall have the meaning ascribed to such term in 
Section 5(b).

     "Applicable Price" means the highest of (i) the highest purchase price 
per share paid pursuant to a tender or exchange offer made for shares of 
Company Common Stock after the date hereof and on or prior to the Put Date, 
(ii) the price per share to be paid by any third Person for shares of Company 
Common Stock pursuant to an agreement for a Business Combination Transaction 
entered into on or prior to the Put Date, and (iii) the Current Market Price. 
 If the consideration to be offered, paid or received pursuant to either of 
the foregoing clauses (i) or (ii) shall be other than in cash, the value of 
such consideration shall be determined in good faith by an independent 
nationally recognized investment banking firm selected by the Grantee and 
reasonably acceptable to the Company, which determination shall be conclusive 
for all purposes of this Agreement.

     "Beneficial Ownership," "Beneficial Owner" and "Beneficially Own" shall 
have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.

     "Business Combination Transaction" shall mean (i) a consolidation, 
exchange of shares or merger of the Company with any Person, other than the 
Grantee or one of its subsidiaries, and, in the case of a merger, in which 
the Company shall not be the continuing or surviving corporation, 

                             STOCK OPTION AGREEMENT
                                       -14-
<PAGE>

(ii) a merger of the Company with a Person, other than the Grantee or one of 
its Subsidiaries, in which the Company shall be the continuing or surviving 
corporation but the then outstanding shares of Company Common Stock shall be 
changed into or exchanged for stock or other securities of the Company or any 
other Person or cash or any other property or the shares of Company Common 
stock outstanding immediately before such merger shall after such merger 
represent less than 50% of the common shares and common share equivalents of 
the Company outstanding immediately after the merger or (iii) a sale, lease 
or other transfer of all or substantially all the assets of the Company to 
any Person, other than the  Grantee or one of its Subsidiaries.

     "Call Consideration" shall have the meaning ascribed to such term in 
Section 5 herein.

     "Call Date" shall have the meaning ascribed to such term in Section 5 
herein.

     "Call Period" shall have the meaning ascribed to such term in Section 5  
    herein.

     "Closing" shall have the meaning ascribed to such term in Section 2 
herein.

     "Closing Date" shall have the meaning ascribed to such term in Section 2 
herein.

     "Confidentiality Agreement" shall mean that certain Letter Agreement 
between the parties hereto dated February 2, 1998.

     "Current Market Price" shall mean, as of any date, the average of the 
closing prices (or, if such securities should not trade on any trading day, 
the average of the bid and asked prices therefor on such day) of the Company 
Common Stock as reported on the New York Stock Exchange Composite Tape during 
the ten consecutive trading days ending on (and including) the trading day 
immediately prior to such date or, if the shares of Company Common Stock are 
not quoted thereon, on The Nasdaq Stock Market or, if the shares of Company 
Common Stock are not quoted thereon, on the principal trading market (as 
defined in Regulation M under the Exchange Act) on which such shares are 
traded as reported by a recognized source during such ten Business Day period.

     "Exercise Event" shall mean any of the events giving rise to a right of 
termination of the Merger Agreement under Section 9.01(b) (breach), 9.01(f) 
(failure to obtain stockholder approval), 9.01(h) (fiduciary out) or 9.01(j) 
(change of recommendation); PROVIDED, HOWEVER, that, in the case of the 
events set forth in Sections 9.01(b) and 9.01(f), at the time of such events 
described in Section 9.01(b) or prior to the Company Stockholders' Meeting 
referenced in Section 9.01(f), there shall also have been an Acquisition 
Proposal involving the Company or any of its Subsidiaries that, at the time 
of such events or meeting, shall not have been (x) rejected by the Company 
and its Board of Directors or (y) withdrawn by the Person making such 
Acquisition Proposal. 
     
     "Exercise Notice" shall have the meaning ascribed to such term in 
Section 2(d)(i) herein.
     
     "Exercise Price" shall have the meaning ascribed to such term in Section 
2 herein.

                             STOCK OPTION AGREEMENT
                                       -15-
<PAGE>

     "Merger Agreement" shall mean that certain Agreement and Plan of Merger 
dated as of the date hereof among Halliburton Company, a Delaware 
corporation, Dresser Industries, Inc., a Delaware corporation, and 
Halliburton N.C., Inc., a Delaware corporation and a wholly owned subsidiary 
of Halliburton Company.

     "Newco" shall mean Halliburton N.C., Inc., a Delaware corporation and a 
wholly owned subsidiary of Grantee.

     "Notice Date" shall have the meaning ascribed to such term in Section 2 
herein.

     "Notional Total Profit" shall mean, with respect to any number of Option 
Shares as to which  the Grantee may propose to exercise the Option, the Total 
Profit determined as of the date of the Exercise Notice assuming that the 
Option were exercised on such date for such number of Option Shares and 
assuming such Option Shares, together with all other Option Shares held by 
the Grantee and its Affiliates as of such date, were sold for cash at the 
closing market price for the Company Common Stock as of the close of business 
on the preceding trading day (less customary brokerage commissions).

     "Offeror's Notice" shall have the meaning ascribed to such term in 
Section 8 herein.

     "Option" shall mean the option granted by the Company to Grantee 
pursuant to Section 2 herein. 

     "Option Shares" shall have the meaning ascribed to such term in Section 
2 herein. 

     "Option Term" shall have the meaning ascribed to such term in Section 2
herein.

     "Put Consideration" shall have the meaning ascribed to such term in 
Section 4 herein.

     "Put Date" shall have the meaning ascribed to such term in Section 4 
herein.

     "Put Period" shall have the meaning ascribed to such term in Section 4 
herein.

     "Put Right" shall have the meaning ascribed to such term in Section 4 
herein.

     "Registration Expenses" shall mean the expenses associated with the 
preparation and filing of any registration statement pursuant to Section 6 
herein and any sale covered thereby (including any fees related to blue sky 
qualifications and filing fees in respect of the National Association of 
Securities Dealers, Inc.), but excluding underwriting discounts or 
commissions or brokers' fees in respect to shares to be sold by the Grantee 
and the fees and disbursements of the Grantee's counsel.

     "Registration Period" shall mean the period of two years following the 
first exercise of the Option by the Grantee.

                             STOCK OPTION AGREEMENT
                                       -16-
<PAGE>

     "Total Profit" shall mean the aggregate (before income taxes) of the 
following: (i) all amounts received by the Grantee pursuant to Sections 5 and 
6 for the repurchase of all or part of the unexercised portion of the Option, 
(ii) (A) the net cash amounts received by the Grantee pursuant to the sale of 
Option Shares (or any other securities into which such Option Shares are 
converted or exchanges) to any party not an Affiliate of the Grantee, less 
(B) the Grantee's purchase price for such Option Shares and (iii) all amounts 
received by the Grantee from the Company pursuant to Section 9.05 (other than 
Section 9.05(f)) of the Merger Agreement.

     "Unexercised Option Shares" shall mean those Option Shares as to which 
the Option remains unexercised from time to time.


                             STOCK OPTION AGREEMENT
                                       -17-