MS, United States (4E) – Many of the lawsuits filed against Halliburton would be settled after the oil giant agreed to pay USD1.1 billion. The lawsuits stem from the damage wreaked by the largest oil spill in the United States.
The agreement would still need to be reviewed by the court as it includes legal fees. Halliburton was blamed by BP Plc and the oil spill victims for its defective cementing work resulting in the oil leak at the Macondo well that occurred back in 2010.
On the other hand, Halliburton blamed BP Plc for the oil spill in the Gulf of Mexico. BP owned the well.
The settlement agreement comes as the decision on the cases is forthcoming and this would mitigate the exposure of the company in compensating the oil spill victims. This also reassures Halliburton’s investors to finally determine the hit the company would take. This also puts to rest the biggest thorn on its side and put all its attention now to develop better oilfield technology to get more profits for the company.
Also included in the agreement are the punitive damages payable to plaintiffs who had alleged property damage or damage to the commercial fishing industry from the disaster. There is also an affirmation clause clearing Halliburton of any compensatory damage liability to the settlement class in the BP settlement.
This stems from the determination by the New Orleans District Court finding contractual indemnity enforceable and valid against Halliburton by BP. This would mean, the liability redounds to BP after this agreement, which is clearly a truce between Halliburton and the claimants in the case.
The settlement amount would be held in trust until the matter is approved by the court pending any sort of appeal. There is also an ‘agreed upon level of participation by the current claimants’, if the same was not complied with, would allow BP to shutter the agreement.
As for the plaintiffs’ attorneys, Stephen Herman and James Roy through a joint statement states, “Halliburton stepped up to the plate and agreed to provide a fair measure of compensation to people and businesses harmed in the wake of the Deepwater Horizon tragedy.
The main losers though are not the companies themselves but their insurance carriers. Before the settlement agreement was forged, Halliburton had already charged fees and expenses amounting to USD294 million. While about 90% of that is covered by insurance, Halliburton has a war chest amounting to USD1.3 billion for costs related to the spill.
The accident had reportedly spilled 4.9 million barrels of oil into the Gulf of Mexico. In the report on the incident by the US government, 11 workers perished. Nine of these workers were employed by Transocean Ltd. Blame was passed between BP and Halliburton, with BP saying the cement works were faulty.
Halliburton said that BP told them to use only six ‘centralizers’, cement blocks that stabilize the well bore during the process. The reason for such decision by BP was to ‘save time and money’ to complete the project.