Halliburton 2015 Annual Report Download - page 78

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Debt maturities
Our long-term debt matures as follows: $659 million in 2016, $79 million in 2017, $823 million in 2018, $1.0 billion
in 2019, $1.3 billion in 2020, and the remainder in 2021 and thereafter.
Bridge facility commitment
In November 2014, we obtained a commitment letter for an $8.6 billion senior unsecured bridge facility in connection
with the pending acquisition of Baker Hughes. Upon issuance of the $7.5 billion principal amount of senior notes in November
2015, the commitment was reduced by that amount to $1.1 billion, and the facility expires on April 30, 2016. We have not
drawn any amounts under this commitment as of December 31, 2015. We may use cash on hand, obtain additional debt
financings or a combination thereof, in lieu of utilizing all or a portion of the bridge facility for the remaining portion of the
cash consideration for the acquisition. See Note 2 for further information about the pending acquisition.
Note 9. Commitments and Contingencies
Macondo well incident
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 an affiliate of Transocean Ltd. and had been drilling
the Macondo exploration well in the Gulf of Mexico for the lease operator, BP Exploration & Production, Inc. (BP). We
performed a variety of services on that well for BP. There were eleven fatalities and a number of injuries as a result of the
Macondo well incident.
Litigation and settlements. Numerous lawsuits relating to the Macondo well incident and alleging damages arising
from the blowout were filed against various parties, including BP, Transocean and us, in federal and state courts throughout the
United States, most of which were consolidated in a Multi District Litigation proceeding (MDL) in the United States Eastern
District of Louisiana. The defendants in the MDL proceeding filed a variety of cross claims against each other.
In 2012, BP reached a settlement to resolve the substantial majority of eligible private economic loss and medical
claims stemming from the Macondo well incident (BP MDL Settlements). The MDL court has since certified the classes and
granted final approval for the BP MDL Settlements, which also provided for the release by participating plaintiffs of
compensatory damage claims against us.
The trial for the first phase of the MDL proceeding occurred in February 2013 through April 2013 and 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. In September 2014, the MDL court ruled (Phase One Ruling) that, among other things, (1) in relation to the
Macondo well incident, BP’s conduct was reckless, Transocean’s conduct was negligent, and our conduct was negligent, (2)
fault for the Macondo blowout, explosion, and spill was apportioned 67% to BP, 30% to Transocean and 3% to us, and (3) the
indemnity and release clauses in our contract with BP are valid and enforceable against BP. The MDL court did not find that
our conduct was grossly negligent, thereby, subject to any appeals, eliminating our exposure in the MDL for punitive damages.
The appeal process for the Phase One Ruling is underway, with various parties filing briefs according to a court-ordered
schedule.
In September 2014, prior to the Phase One Ruling, we reached an agreement, subject to court approval, to settle a
substantial portion of the plaintiffs’ claims asserted against us relating to the Macondo well incident (our MDL Settlement).
Pursuant to our MDL Settlement, we agreed to pay an aggregate of $1.1 billion, which includes legal fees and costs, into a
settlement fund in three installments over two years, except that one installment of legal fees will not be paid until all of the
conditions to the settlement have been satisfied or waived. Certain conditions must be satisfied before our MDL Settlement
becomes effective and the funds are released from the settlement fund. These conditions include, among others, the issuance of
a final order of the MDL court, including the resolution of certain appeals. In addition, we have the right to terminate our MDL
Settlement if more than an agreed number of plaintiffs elect to opt out of the settlement prior to the expiration of the opt out
deadline to be established by the MDL court. Before approving our MDL Settlement, the MDL court must certify the
settlement class, the numerous class members must be notified of the proposed settlement, and the court must hold a fairness
hearing. We are unable to predict when the MDL court will approve our MDL Settlement.
Our MDL Settlement does not cover claims against us by the state governments of Alabama, Florida, Mississippi,
Louisiana, or Texas, claims by our own employees, compensatory damages claims by plaintiffs in the MDL that opted out of or
were excluded from the settlement class in the BP MDL Settlements, or claims by other defendants in the MDL or their
respective employees. However, these claims have either been dismissed, are subject to dismissal, are subject to
indemnification by BP, or are not believed to be material.
On May 20, 2015, we and BP entered into an agreement to resolve all remaining claims against each other, and
pursuant to which BP will defend and indemnify us in future trials for compensatory damages. We have also reached a similar
agreement with Transocean, each agreeing to drop all remaining claims against the other. On July 2, 2015, BP announced that it
had reached agreements in principle to settle all remaining federal, state and local government claims arising from the Macondo
well incident.