Halliburton 2011 Annual Report Download - page 39

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Item 3. Legal Proceedings.
The Gulf of Mexico/Macondo well incident
Overview. The semisubmersible drilling rig, Deepwater Horizon, sank on April 22, 2010 after an
explosion and fire onboard the rig that began on April 20, 2010. The Deepwater Horizon was owned by
Transocean Ltd. and had been drilling the Macondo exploration well in Mississippi Canyon Block 252 in
the Gulf of Mexico for the lease operator, BP Exploration & Production, Inc. (BP Exploration), an indirect
wholly owned subsidiary of BP p.l.c. We performed a variety of services for BP Exploration, including
cementing, mud logging, directional drilling, measurement-while-drilling, and rig data acquisition services.
Crude oil flowing from the well site spread across thousands of square miles of the Gulf of Mexico and
reached the United States Gulf Coast. Numerous attempts at estimating the volume of oil spilled have been
made by various groups, and on August 2, 2010 the federal government published an estimate that
approximately 4.9 million barrels of oil were discharged from the well. Efforts to contain the flow of
hydrocarbons from the well were led by the United States government and by BP p.l.c., BP Exploration,
and their affiliates (collectively, BP). The flow of hydrocarbons from the well ceased on July 15, 2010, and
the well was permanently capped on September 19, 2010. There were eleven fatalities and a number of
injuries as a result of the Macondo well incident.
We are currently unable to estimate the impact the Macondo well incident will have on us. The
multi-district litigation (MDL) trial referred to below is scheduled to begin in late February 2012, and
recently there have been and we expect there will continue to be orders and rulings of the court that impact
the MDL. Moreover, as discussed below, BP has in the last nine months settled litigation with several other
defendants in the MDL. We cannot predict the outcome of the many lawsuits and investigations relating to
the Macondo well incident, including whether the MDL will proceed to trial, the results of any such trial, or
whether we might settle with one or more of the parties to any lawsuit or investigation. Given the numerous
potential future developments relating to the MDL and other lawsuits and investigations, we are unable to
conclude whether we will incur a loss. As of December 31, 2011, we have not accrued any amounts related
to this matter because we have not determined that a loss is probable and a reasonable estimate of a loss or
range of loss related to this matter cannot be made. As a result of any future developments, some of which
could occur as soon as within the next few months, we may adjust our liability assessment, and liabilities
arising out of this matter could have a material adverse effect on our liquidity, consolidated results of
operations, and consolidated financial condition.
Investigations and Regulatory Action. The United States Coast Guard, a component of the United
States Department of Homeland Security, and the Bureau of Ocean Energy Management, Regulation and
Enforcement (BOEMRE) (formerly known as the Minerals Management Service (MMS) and which was
replaced effective October 1, 2011 by two new, independent bureaus – the Bureau of Safety and
Environmental Enforcement (BSEE) and the Bureau of Ocean Energy Management (BOEM)), a bureau of
the United States Department of the Interior, shared jurisdiction over the investigation into the Macondo
well incident and formed a joint investigation team that reviewed information and held hearings regarding
the incident (Marine Board Investigation). We were named as one of the 16 parties-in-interest in the Marine
Board Investigation. The Marine Board Investigation, as well as investigations of the incident that were
conducted by The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling
(National Commission) and the National Academy of Sciences, have been completed, and reports issued as
a result of those investigations are discussed below. In addition, the Chemical Safety Board is conducting
an investigation to examine the root causes of the accidental release of hydrocarbons from the Macondo
well, including an examination of key technical factors, the safety cultures involved, and the effectiveness
of relevant laws, regulations, and industry standards.