GoM Oil Spill: Halliburton Sues BP - Analyst Blog
September 06 2011 - 10:15AM
Zacks
Major oilfield services provider
Halliburton Co. (HAL) has filed a
suit in the Texas state court against British energy giant
BP plc (BP) accusing it of
negligent misrepresentation, business disparagement and defamation
related to last year’s Deepwater Horizon rig disaster. The
Texas-based company, which provided cementing job for the Macondo
well in the Gulf of Mexico (GoM), has blamed BP of concealing key
information that led to the biggest environmental catastrophe in
U.S. history.
As a reminder, on April 20, 2010,
offshore driller Transocean Ltd’s
(RIG) ultra-deepwater Horizon drilling
platform, contracted to BP, sank following an explosion while
operating in the U.S. GoM off the coast of Louisiana.
The incident killed 11 workers and
spewed more than 200 million gallons of crude in what is touted as
the country’s worst oil spill ever. Subsequently, a moratorium was
imposed on offshore drilling at water depths of more than 500 feet
in the region, which was lifted on October 12, 2010.
The lawsuit filed by Halliburton
alleges that BP – the owner of the Macondo well with a 65% interest
– provided wrong information about the actual location of oil and
gas producing zones in the well prior to the cementing services
performed by Halliburton.
Earlier in April this year, BP filed
suits in the New Orleans federal court against two of its
contractors – Transocean and Cameron International Corp.
(CAM) – seeking billions of dollars in
damages and other costs. The London-based group has accused
Transocean and Cameron of negligence.
On the other hand, Transocean has
pinpointed the root causes of the explosion as being tied to the
BP’s ‘poor’ design of the well. BP overlooked the risks
associated with the Macondo well and did not communicate the
danger, alleges Transocean. The drilling contractor’s report goes
on to say that BP, together with Halliburton, was to be blamed for
the ‘poor cement job’ that allowed the oil/gas to burst through the
reservoir and reach the rig, causing the explosion.
Now, with Halliburton seeking to
deflect the accusation to its employer, the legal battle over who
is to blame for the accident gets more intense. According to
reports, a federal trial is scheduled for next year to assess the
degree of fault and the quantum of liability that lies with the
companies.
BP and Transocean shares currently
retain a Zacks #3 Rank, which translates into a short-term 'Hold'
rating whereas Cameron has a Zacks #2 Rank (short-term Buy rating).
Halliburton currently retains a Zacks #1 Rank, or a short-term
Strong Buy rating.
Longer-term, we are maintaining our
Outperform recommendation on Halliburton, while being Neutral on
the other stocks.
BP PLC (BP): Free Stock Analysis Report
CAMERON INTL (CAM): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
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