Halliburton 2013 Annual Report Download - page 23

7
Certain matters relating to the Macondo well incident, including increased regulation of the United States offshore
drilling industry, and similar catastrophic events could have a material adverse effect on our liquidity, consolidated results of
operations, and consolidated financial condition.
The Macondo well incident and the subsequent oil spill resulted in offshore drilling delays, temporary drilling bans, and
increased federal regulation of our and our customers' operations, and more regulations and delays are possible. For example, the
BSEE has:
- issued regulations that provide revised casing and cementing requirements, including integrity testing standards, that
mandate independent third-party verifications, that impose blowout preventer capability, testing, and documentation
obligations, and that outline standards for specific well control training for deepwater operations, among other
requirements;
- issued revised regulations in 2013 to require, among other things, increased employee involvement in certain safety
measures and third-party audits of operators’ safety and environmental management systems;
- proposed stricter requirements for subsea drilling production equipment;
- stated that it intends to propose new standards for the design and maintenance of blowout preventers; and
- stated that it, together with the Bureau of Ocean Energy Management, is drafting new standards governing drilling in
the Arctic.
In addition, the BSEE contends that it has the legal authority to extend its regulatory reach to include contractors, like us, in
addition to operators, as evidenced by the INCs.
The increased regulation of the exploration and production industry as a whole that arises out of the Macondo well
incident has and could continue to result in higher operating costs for us and our customers, extended permitting and drilling
delays, and reduced demand for our services. We cannot predict to what extent increased regulation may be adopted in
international or other jurisdictions or whether we and our customers will be required or may elect to implement responsive
policies and procedures in jurisdictions where they may not be required.
In addition, the Macondo well incident negatively impacted and could continue to negatively impact the availability and
cost of insurance coverage for us, our customers, and our and their service providers. Also, our relationships with BP and others
involved in the Macondo well incident could be negatively affected. Our business may be adversely impacted by any negative
publicity relating to the incident, any negative perceptions about us by our customers, any increases in insurance premiums or
difficulty in obtaining coverage, and the diversion of management's attention from our operations to focus on matters relating to
the incident.
As illustrated by the Macondo well incident, the services we provide for our customers are performed in challenging
environments that can be dangerous. Catastrophic events such as a well blowout, fire, or explosion can occur, resulting in
property damage, personal injury, death, pollution, and environmental damage. While we have agreements with certain
customers that require them to indemnify us for these types of events and the resulting damages and injuries (except in some
cases, claims by our employees, loss or damage to our property, and any pollution emanating directly from our equipment), we
will be exposed to significant potential losses should such catastrophic events occur if adequate indemnification provisions or
insurance arrangements are not in place, if indemnity or related release from liability provisions are determined by a court to be
unenforceable or otherwise invalid, in whole or in part, or if our customers are unable or unwilling to satisfy any indemnity
obligations.
The matters discussed above relating to the Macondo well incident and similar catastrophic events could have a material
adverse effect on our liquidity, consolidated results of operations, and consolidated financial condition.