HOUSTON (Reuters) - Halliburton Co HAL.N said on Wednesday that Chief Executive Officer Dave Lesar will retire on June 1 and be replaced by Jeff Miller, Lesar's longtime deputy and fellow board member.

Dave Lesar, Chairman and Chief Executive Officer of Halliburton speaks to CNBC on the floor of the New York Stock Exchange shortly after the opening bell in New York November 18, 2014. REUTERS/Lucas Jackson

Lesar will stay on as executive chairman of the world’s second-largest oilfield service provider until December 2018, when he reaches the company’s mandatory retirement age of 65.

The transition, which was expected, comes as Halliburton tries to recover from a two-year oil price downturn that has eroded profit margins and forced the company to lay off thousands of workers.

Miller, 53, has a reputation inside Halliburton for working well with customers and employees, and for leading successful projects, according to former and current employees.

Miller’s first task will be renegotiating contracts with oil producers, convincing them to pay more for Halliburton’s pressure pumping and other services.

The company, whose revenues plunged 33 percent last year to $15.9 billion, and its peers have warned since January that higher prices are needed to help provide the labor and parts needed to fuel the oil industry’s nascent recovery.

Halliburton, with headquarters in Houston and Dubai, signaled last month that demand is rising, especially in North America’s shale oil patch. But the company has yet to be able to raise costs measurably, denting profit.

“I look forward to leading our organization as we continue to collaborate and engineer solutions to maximize asset value for our customers,” Miller said in a statement.

Lesar, who became CEO after predecessor Dick Cheney was nominated to be U.S. vice president in 2000, will step back from day-to-day company management but still be involved in talks with customers and shareholders.

Lesar signed a new employment contract with the company through the end of next year that will prohibit him from working for peers for another four-year period.

“I have known and worked with Jeff for almost 30 years and have great confidence that he is the best choice to be the next Halliburton CEO,” Lesar said in a statement.

A Dallas native, Miller joined Halliburton in 1997. Like Lesar, he is an accountant by training.

He assumes the top role after Halliburton lost its long-time chief financial officer, Mark McCollum, who left in March to become CEO at rival Weatherford International Plc WFT.N.

Lesar's unusually long tenure at the company was marked by growth but also controversy. The company came under withering criticism for its flawed work on BP's BP.L Deepwater Horizon drilling rig before it exploded in 2010, causing the Gulf of Mexico oil spill. Halliburton was also the subject of a Foreign Corrupt Practices Act investigation for work in Nigeria.

Shares of Halliburton have dropped 14 percent so far this year, closing Wednesday at $46.34 per share.