Halliburton shares still sliding on spill report

By Reuters
Posted Oct. 29, 2010 at 10:14 a.m.

Halliburton Co. shares continued to slide on Friday, a day after a government panel said the oilfield service company used flawed cement on the BP well that blew out in the Gulf of Mexico, causing the worst offshore oil spill in U.S. history.

Investors worried about Halliburton’s liability sent the shares down as much as 16 percent on Thursday after the White House panel issued its report and a letter. The stock continued its slide on Friday, falling 1.4 percent.

Halliburton vigorously defended its actions in a lengthy statement issued Thursday night, saying there were significant differences between the company’s tests on the cement used in the Macondo well and the government’s tests.

“Just like Chucky the horror movie doll, Macondo just won’t go away,” Houston-based energy research firm Tudor, Pickering Holt and Co said in a note to clients on Friday.

“(The) letter to presidential commission from investigating law firm brought cement quality issue back into play as variable, taking $2.5 billion out of Halliburton’s market cap in the process.”

The report may cause some analysts to back away from Halliburton shares and may cause some diversified portfolio managers to sell, Tudor, Pickering said. This would be a mistake, the research firm said, because Halliburton has strong indemnity in place.

Halliburton was hired by BP to perform the cementing operations to seal the well, which ruptured on April 20. The blowout killed 11 workers who were on the Transocean Ltd rig contracted to drill the well.

Halliburton said responsibility for the disaster lies with BP, saying the British oil major did not do a key test to determine the integrity of the cement job.

“BP, as the well owner and operator, decided not to run a cement bond log test even though the appropriate personnel and equipment were on the rig and available to run that test,” Halliburton said in its statement.

The drop in Halliburton’s stock is “ridiculous” because BP, as operator of the project, had the final say on the job, Capital One Southcoast said in its morning note to clients.

Shares of Halliburton fell 43 cents to $31.25 in morning trading on the New York Stock Exchange. They closed at $31.68 on Thursday, down 8 percent, after falling as much as 16 percent earlier in the session.

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