Will Halliburton have to shoulder 15 percent of BP’s mess?

October 28, 2010

Halliburton has been dragged further into the BP mess. The oil contractor lost $3 billion of market value on charges by a presidential commission that it did a shoddy job cementing the rig that cracked and led to the disastrous leak. That suggests investors expect Halliburton to pay a big slice of BP’s $20 billion cleanup fund. It’s possible—but don’t count on it.

Well blowups are seldom the result of a single blunder. And BP’s epic Gulf of Mexico spill is certainly no exception. So it should come as no surprise there were problems with the cement job done by Halliburton. Soon after, BP was quick to parcel out responsibility. Any confirming evidence will help provide BP’s public relations with some cover. Equally, any indication of Halliburton error will spread the reputational damage.
Yet it is too early to say that Halliburton will suffer such a substantial financial hit. The letter from the panel’s lead investigator was less damning than some initial press reports indicated. Halliburton shared test results with BP suggesting its cement had “failed to meet industry standards.” Had Halliburton failed to disclose material details this would look far worse. BP also had time to react and rectify the situation since the finding came more than a month before the blowup.

The findings also take a more sympathetic turn. Cementing is a “complex endeavor,” the investigator says, and “cementing failures are not uncommon even in the best of circumstances.” When failures occur the industry can conduct pressure tests and cement evaluation logs. The investigator adds that BP, and possibly Transocean—the other main contractor—”misinterpreted” or “chose not to conduct such tests at the Macondo well.”

Of course Halliburton isn’t completely off the hook either. It is almost certain to rack up expenses in the multi-year legal battle over liability for the spill. But unlike Anadarko Petroleum Corporation , BP’s silent partner in Macondo and owner of a 25 percent stake, Halliburton was a contractor. It’s hard to believe it will be stuck footing such a chunky portion of the bill.

Comments

In the light of new and damaging information about Halliburton (Dick Cheney’s company), Halliburton should respond in the way other companies have when confronted by embarrassing and potentially costly bad new. CHANGE THEIR NAME.
The infamous Blackwater is now known as “Xe Services” (how cute)
Phillip Morris is now Altria. the Challenger accident ValuJet reemerging as AirTran Airways after a deadly plane crash in 1996
That gives them a whole new lease on life and enables them to continue business as usual without having to change a thing.
What’s in a name?
PROFIT

Posted by Naksuthin | Report as abusive
 

Of course they won’t have to pay. They are an American company.

Posted by Sharedbyus | Report as abusive
 

There will be plenty to pay for whoever touched the project. The only thing is how much, and can they still work togethere on other projects. As long as they have learned something and if the government regulators have learned something we can move on.

Posted by fred5407 | Report as abusive
 

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