Halliburton 2013 Annual Report Download - page 75

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this time the effect that the settlements, or any challenge, modification, or overturning of the settlements, may have on claims
against us.
The MDL court has dismissed: (1) claims by or on behalf of owners, lessors, and lessees of real property that allege to
have suffered a reduction in the value of real property even though the property was not physically touched by oil and the
property was not sold; (2) claims for economic losses based solely on consumers' decisions not to purchase fuel or goods from
BP fuel stations and stores based on consumer animosity toward BP; and (3) claims by or on behalf of recreational fishermen,
divers, beachgoers, boaters and others that allege damages such as loss of enjoyment of life from their inability to use portions
of the Gulf of Mexico for recreational and amusement purposes. In dismissing those claims, the MDL court also noted that we
are not liable with respect to those claims under the OPA because we are not a “responsible party” under OPA. A group of
plaintiffs appealed the order, but the Fifth Circuit dismissed the appeal.
The first phase of the MDL trial, which concluded in April 2013, covered issues arising out of the conduct and degree
of culpability of various parties allegedly relevant to the loss of well control, the ensuing fire and explosion on and sinking of
the Deepwater Horizon, and the initiation of the release of hydrocarbons from the Macondo well. At the conclusion of the
plaintiffs' case, we and the other defendants each submitted a motion requesting the MDL court to dismiss certain claims. In
March 2013, the MDL court denied our motion and declined to dismiss any claims, including those alleging gross negligence,
against BP, Transocean and us. In addition, the MDL court dismissed all claims against M-I Swaco and claims alleging gross
negligence against Cameron International Corporation (Cameron). In April 2013, the MDL court dismissed all remaining
claims against Cameron, leaving BP, Transocean, and us as the remaining defendants with respect to the matters addressed
during the first phase of the trial.
Also in March 2013, we advised the MDL court that we recently found a rig sample of dry cement blend collected at
another well that was cemented before the Macondo well using the same dry cement blend as used on the Macondo production
casing. In April 2013, we advised the MDL parties that we recently discovered some additional documents related to the
Macondo well incident. BP and others have asked the court to impose sanctions and adverse findings against us because,
according to their allegations, we should have identified the cement sample in 2010 and the additional documents by October
2011. BP also reasserted its previous allegations that we destroyed evidence relating to post-incident testing of the foam cement
slurry on the Deepwater Horizon. The MDL court has not ruled on the requests for sanctions and adverse findings. We believe
that the discoveries were the result of simple misunderstandings or mistakes and do not involve any material evidence, and that
sanctions are not warranted.
When our plea agreement with the DOJ was announced in July 2013, BP filed a motion requesting that the MDL court
re-open the evidence for phase one of the MDL trial to take into account our guilty plea and re-urging their request for
sanctions. After the plea was entered, the PSC and the States of Alabama and Louisiana (as coordinating counsel for the states
involved in the MDL) filed a motion likewise seeking to admit the guilty plea agreement and other court filings into evidence
and asking that the MDL court use that evidence as a basis for assessing punitive damages against us. We filed replies opposing
both motions and setting forth our position that the deleted post-incident computer simulations were not evidence, were not
relevant, and in any event were re-created. The MDL court has not ruled on the motions.
The second phase of the MDL trial was split into two parts, with testimony presented in October 2013. The first part
covered attempts to collect, control, or halt the flow of hydrocarbons from the well, while the second part covered the
quantification of hydrocarbons discharged from the well. The parties submitted proposed findings of fact and conclusions of
law, post-trial briefs and responses during December 2013 and January 2014. According to a stipulation and post-trial filings,
BP contends that 2.45 million barrels of oil were released into the Gulf of Mexico and the DOJ contends that a total of 4.2
million barrels were released. The MDL court has not issued a ruling on the questions that were the subject of the first two
phases of the trial, although those rulings could be issued at any time.
Subsequent proceedings would be held to the extent triable issues remain unresolved by the first two phases of the
trial, settlements, motion practice, or stipulation. Although the DOJ participated in the first two phases of the trial with regard to
BP's conduct and the amount of hydrocarbons discharged from the well, the MDL court anticipates that the DOJ's civil action
for the CWA violations, fines, and penalties will be addressed by the court in a third phase of the trial to the extent necessary.
Damages for the cases tried in the MDL proceeding, including punitive damages, are expected to be tried following the
issuance of the MDL court’s rulings regarding the phases of the trial described above. Under ordinary MDL procedures, such
cases would, unless waived by the respective parties, be tried in the courts from which they were transferred into the MDL. It
remains unclear, however, what impact the overlay of the Limitation Action will have on where these matters are tried. The
judge has indicated that he intends for the State of Alabama’s OPA compensatory damages claims against BP be tried as a test
case.
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.