Monday, November 1, 2010

Goldman (NYSE:GS) Says Buy Halliburton (NYSE:HAL), Citing Liability Headlines

Goldman Sachs (NYSE:GS) said investors should buy into Halliburton (NYSE:HAL) based on liability headlines which very likely won't pan out in their view.

Although there are a lot of contradictory stories emerging from the report from the National Commission on the BP Deepwater Horizon Oil Spill, which concluded the cement mud used to seal the Macondo well of BP (NYSE:BP) was unstable, Goldman seems sure Halliburton did what it could to provide a safe seal, and the drop in share price should be considered a buying opportunity.

"The slurry that was actually used on the well was tested, and passed, prior
to being pumped," Goldman asserted.

Goldman reminded clients in their note that "due to the low number of stabilizers that BP chose to use and urged BP to conduct all proper tests (including a cement bond log, which was not done)."

"At the end of the day, BP ran a negative pressure test and accepted the inconclusive results", Goldman concluded.

This seems to be far too optimistic, far too soon, to come to this conclusion, which bears the resemblance of cheerleading rather than a decision based upon objective response to the conditions.

It's not that Goldman may or may not end up being right about Halliburton, it's that it seems too soon to look at this as an opportunity to buy before this part of the narrative plays out.

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