Halliburton agrees US$1.1 billion deal for 2010 Gulf of Mexico oil spill

US company reaches settlement for role in 2010 disaster at BP well in Gulf of Mexico

PUBLISHED : Wednesday, 03 September, 2014, 2:16am
UPDATED : Wednesday, 03 September, 2014, 5:41am

Halliburton has reached a US$1.1 billion settlement for a majority of claims against the company for its role in the biggest US offshore oil spill in 2010.

The agreement announced by the company helps the it avoid billions more in potential penalties.

The oilfield services company, accused of doing defective work on BP's Macondo well before it exploded in 2010, killing 11 men and dumping 4.9 million barrels of oil into the Gulf of Mexico, said the agreement resolves "a substantial majority" of its liability in the disaster.

Halliburton's settlement comes as the federal judge overseeing oil-spill cases weighs fault for the accident, and averts the risk of a more costly judgment against the company in favour of some spill victims. The agreement removes much of the uncertainty that has plagued Halliburton for the past four years as investors waited to see how much the company might be hurt by payouts in the case. With its biggest piece of liability resolved, Halliburton can refocus its attention on developing new oilfield technology that will help it boost profits worldwide.

"It's actually a pretty decent settlement for them," said Rob Desai, an analyst at Edward Jones in the US. "This eliminates an overhang."

Halliburton has set aside reserves of US$1.3 billion for costs related to the incident.

US District Judge Carl Barbier, who oversees the spill cases in New Orleans, is expected to rule within days or weeks on how much blame each company carries for the disaster. A decision that Halliburton committed fraud and gross negligence in the case would have opened the company to billions in punitive and compensatory damages.

The settlement avoids that by resolving both punitive and compensatory liability in most lawsuits from private plaintiffs and local governments. BP and Transocean both continue to face liability from those lawsuits.

Halliburton's agreement is subject to court approval, but the US$1.1 billion represents the most significant payout yet for Halliburton in the disaster. Transocean, owner of the drilling rig and another defendant in the case, settled some claims for US$1.4 billion last year, while BP has paid more than US$28 billion and faces potentially tens of billions more.