Halliburton 2011 Annual Report Download - page 32

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17
Liability for cleanup costs, natural resource damages, and other damages arising as a result of
environmental laws could be substantial and could have a material adverse effect on our liquidity,
consolidated results of operations, and consolidated financial condition.
We are exposed to claims under environmental requirements and, from time to time, such claims
have been made against us. In the United States, environmental requirements and regulations typically
impose strict liability. Strict liability means that in some situations we could be exposed to liability for
cleanup costs, natural resource damages, and other damages as a result of our conduct that was lawful at the
time it occurred or the conduct of prior operators or other third parties. Liability for damages arising as a
result of environmental laws could be substantial and could have a material adverse effect on our liquidity,
consolidated results of operations, and consolidated financial condition.
We are periodically notified of potential liabilities at federal and state superfund sites. These
potential liabilities may arise from both historical Halliburton operations and the historical operations of
companies that we have acquired. Our exposure at these sites may be materially impacted by unforeseen
adverse developments both in the final remediation costs and with respect to the final allocation among the
various parties involved at the sites. For any particular federal or state superfund site, since our estimated
liability is typically within a range and our accrued liability may be the amount on the low end of that
range, our actual liability could eventually be well in excess of the amount accrued. The relevant regulatory
agency may bring suit against us for amounts in excess of what we have accrued and what we believe is our
proportionate share of remediation costs at any superfund site. We also could be subject to third-party
claims, including punitive damages, with respect to environmental matters for which we have been named
as a potentially responsible party.
Constraints in the supply of, prices for, and availability of transportation of raw materials can
have a material adverse effect on our consolidated results of operations.
Raw materials essential to our business are normally readily available. High levels of demand for
raw materials, such as gels, proppants, and hydrochloric acid, can trigger constraints in the supply chain of
those raw materials, particularly where we have a relationship with a single supplier for a particular
resource. Many of the raw materials essential to our business require the use of rail, storage, and trucking
services to transport the materials to our jobsites. These services, particularly during times of high demand,
may cause delays in the arrival of or otherwise constrain our supply of raw materials. These constraints
could have a material adverse effect on our business and consolidated results of operations. In addition,
price increases imposed by our vendors for raw materials used in our business and the inability to pass
these increases through to our customers could have a material adverse effect on our business and
consolidated results of operations.
Doing business with national oil companies exposes us to greater risks of cost overruns, delays,
and project losses and unsettled political conditions that can heighten these risks.
Much of the world’ s oil and natural gas reserves are controlled by national or state-owned oil
companies (NOCs). Several of the NOCs are among our top 20 customers. Increasingly, NOCs are turning
to oilfield services companies like us to provide the services, technologies, and expertise needed to develop
their reserves. Reserve estimation is a subjective process that involves estimating location and volumes
based on a variety of assumptions and variables that cannot be directly measured. As such, the NOCs may
provide us with inaccurate information in relation to their reserves that may result in cost overruns, delays,
and project losses. In addition, NOCs often operate in countries with unsettled political conditions, war,
civil unrest, or other types of community issues. These types of issues may also result in similar cost
overruns, delay, and project losses.