Hounding Halliburton

28 October 2010 By Christopher Swann

The contractor’s loss of $3 bln of market value, on charges it did a shoddy job in cementing the BP rig that cracked, suggests investors expect the contractor to pay a big slice of BP’s $20 bln cleanup fund. That’s possible but don’t count on it.

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The foam cement that Halliburton used to seal BP's doomed Macondo well was unstable and may have contributed to the blowout that led to the worst offshore oil spill in U.S. history, a presidential commission said on Oct. 28.

Both Halliburton and BP were aware of flaws in the cement mixture used to seal the well as early as March 8, weeks before the blowout occurred on April 20, according to the National Oil Spill Commission's chief counsel, Fred Bartlit.

Shares of Halliburton fell sharply after the report's release. The stock tumbled 16 percent before recovering some losses. Halliburton shares were off 11 percent, or $3.66 at $30.76 in afternoon trade on the New York Stock Exchange.

Tests conducted by industry cement experts show that "the foam cement used at Macondo was unstable," Bartlit wrote in a letter to cochairs Bob Graham and Bill Reilly. "Halliburton (and perhaps BP) should have considered redesigning the foam slurry before pumping it at the Macondo well."

In an emailed statement, Halliburton said it is reviewing the report and will publish a response later on Thursday. A BP spokesman had no immediate reaction.

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