Halliburton 2011 Annual Report Download - page 48

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In September 2011, we filed claims in Harris County, Texas against the BP Defendants seeking
damages, including lost profits and exemplary damages, and alleging negligence, grossly negligent
misrepresentation, defamation, common law libel, slander, and business disparagement. Our claims allege
that the BP Defendants knew or should have known about an additional hydrocarbon zone in the well that
the BP Defendants failed to disclose to us prior to our designing the cement program for the Macondo well.
The location of the hydrocarbon zones is critical information required prior to performing cementing
services and is necessary to achieve desired cement placement. We believe that had BP Defendants
disclosed the hydrocarbon zone to us, we would not have proceeded with the cement program unless it was
redesigned, which likely would have required a redesign of the production casing. In addition, we believe
that the BP Defendants withheld this information from the BP Report and from the various investigations
discussed above. In connection with the foregoing, we also moved to amend our claims against the BP
Defendants in the MDL proceeding to include fraud. The BP Defendants have denied all of the allegations
relating to the additional hydrocarbon zone and filed a motion to prevent us from adding our fraud claim in
the MDL. In October 2011, our motion to add the fraud claim against the BP Defendants in the MDL
proceeding was denied. The court’ s ruling does not, however, prevent us from using the underlying
evidence in our pending claims against the BP Defendants.
In December 2011, BP filed a motion for sanctions against us alleging, among other things, that
we destroyed evidence relating to post-incident testing of the foam cement slurry on the Deepwater
Horizon and requesting adverse findings against us. A magistrate judge in the MDL proceeding denied
BP’ s motion. BP appealed that ruling, and Judge Barbier affirmed the magistrate judge’ s decision.
We intend to vigorously defend any litigation, fines, and/or penalties relating to the Macondo well
incident and to vigorously pursue any damages, remedies, or other rights available to us as a result of the
Macondo well incident. We have incurred and expect to continue to incur significant legal fees and costs,
some of which we expect to be covered by indemnity or insurance, as a result of the numerous
investigations and lawsuits relating to the incident.
Macondo derivative case. In February 2011, a shareholder who had previously made a demand on
our board of directors with respect to another derivative lawsuit filed a shareholder derivative lawsuit
relating to the Macondo well incident. See “Shareholder derivative cases” below.
Indemnification and Insurance. Our contract with BP Exploration relating to the Macondo well
generally provides for our indemnification by BP Exploration for certain potential claims and expenses
relating to the Macondo well incident, including those resulting from pollution or contamination (other than
claims by our employees, loss or damage to our property, and any pollution emanating directly from our
equipment). Also, under our contract with BP Exploration, we have, among other things, generally agreed
to indemnify BP Exploration and other contractors performing work on the well for claims for personal
injury of our employees and subcontractors, as well as for damage to our property. In turn, we believe that
BP Exploration was obligated to obtain agreement by other contractors performing work on the well to
indemnify us for claims for personal injury of their employees or subcontractors, as well as for damages to
their property. We have entered into separate indemnity agreements with Transocean and M-I Swaco,
under which we have agreed to indemnify those parties for claims for personal injury of our employees and
subcontractors and they have agreed to indemnify us for claims for personal injury of their employees and
subcontractors.
In April 2011, we filed a lawsuit against BP Exploration in Harris County, Texas to enforce BP
Exploration’ s contractual indemnity and alleging BP Exploration breached certain terms of the contractual
indemnity provision. BP Exploration removed that lawsuit to federal court in the Southern District of
Texas, Houston Division. We filed a motion to remand the case to Harris County, Texas, and the lawsuit
was transferred to the MDL.