Halliburton Settles Macondo Criminal Charges But Civil Claims Remain A Concern

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Halliburton Company
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Halliburton (NYSE:HAL) has reached an agreement with the U.S. Department of Justice to settle criminal charges relating to the 2010 Gulf of Mexico oil spill. The firm has agreed to plead guilty of destroying evidence relating to the spill and will pay a fine of $200,000, accept a term of three years probation and will also make a voluntary $55 million contribution to the National Fish and Wildlife Foundation. [1] The plea is subject to court approval. Halliburton was was BP’s cementing contractor on the Deepwater Horizon oil rig that exploded in April 2010,  killing 11 people and causing the worst offshore oil spill in the Unites States history.

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While Halliburton has for long denied responsibility for the incident, the quality of the cementing, which is used to seal pipes into place in oil wells to prevent leaks, has been the subject of scrutiny. The firm had been arguing that BP (NYSE:BP) had been trying to save time and cut costs by choosing to use only 6 casing centralizers on the well rather than 21 centralizers that Halliburton had recommended to supposedly make the well safer. Centralizers are used to stabilize the well bore during cementing. However, Halliburton has now pleaded guilty of destroying evidence on internal tests that it had conducted, which showed that there was actually little difference in the effectiveness between putting 6 versus 21 casing centralizers in the well.

While this deal would end the criminal case against Halliburton, the company still faces private claims from businesses and residents on the Gulf coast and the guilty plea could potentially weaken the company’s position in these civil suits. During Q1, the firm took a $637 million charge towards possible settlement costs related to the incident and the company’s reserve related to the incident now stands at around $1.3 billion. Halliburton has said that it was taking part in court-facilitated settlement discussions to resolve a significant part of the private claims. ((Washington Post)) The other two companies involved in the spill, BP and Transocean (NYSE:RIG), have already entered into guilty pleas and have agreed to pay criminal fines of around of $1.26 billion and $400 million, respectively.

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  1. Bloomberg []
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