Halliburton Co, North America’s top oilfield services provider, said it reached a $1.1 billion settlement for a majority of claims related to its role in BP Plc’s oil spill in the Gulf of Mexico in 2010.
The settlement, which includes legal fees, is subject to approval by the U.S. District Court for the Eastern District of Louisiana, Halliburton said.
The amount, to be paid in three installments over the next two years, will be put into a trust until all appeals are resolved, the company said.
“We think this is a smart move by Halliburton,” said Stewart Glickman, an equity analyst at S&P Capital IQ. “While state claims by Louisiana and Alabama remain, we think this trims legal overhang.”
Halliburton, whose shares were marginally lower on Tuesday, had set aside $1.3 billion for costs related to the incident.
The Macondo well blowout and rig explosion in April 2010 killed 11 people and spilled millions of barrels of oil for 87 days after the blast.
The settlement protects Halliburton from certain punitive damages if the court were to rule later that the company had been negligent or ‘grossly negligent’ for its role in the blowout, Chief Financial Officer Mark McCollum said.
A decision is awaited from U.S. District Judge Carl Barbier in New Orleans ascertaining the extent of negligence of BP, Halliburton and rig contractor Transocean Ltd.
Transocean agreed last year to pay $1.4 billion to settle U.S. government charges for its role in the disaster. BP, which also faces potential fines under the Clean Water Act in the United States, has so far paid about $28 billion.
“BP has claims against us for contribution for their exposure under the Clean Water Act,” McCollum said at the Barclays CEO energy-power conference on Tuesday.
“We do not think that stands the legal test because we are not under maritime laws.”
Halliburton provided cementing services for BP at the well, including the placement of “centralizers” that help stabilize the well bore during cementing.
The company had earlier blamed BP’s decision to use only six centralizers – to save “time and money” – for the blowout.
Halliburton’s shares were down 0.18 percent at $67.49 in afternoon trading on the New York Stock Exchange.
(Reporting by Swetha Gopinath in Bangalore; Editing by Saumyadeb Chakrabarty, Kirti Pandey and Savio D’Souza)
Word Count: 394