Monday, November 1, 2010

Halliburton (NYSE:HAL), Transocean (NYSE:RIG), Anadarko (NYSE:APC), Cameron (NYSE:CAM), Mitsui (Nasdaq:MITSY): Will They Pay BP (NYSE:BP) Anything?

Even though there are agreements in place which indemnify or protect oil companies like Halliburton (NYSE:HAL), Transocean (NYSE:RIG), Anadarko Petroleum (NYSE:APC) and Cameron International (NYSE:CAM) from liability in most cases, in reference to the BP (NYSE:BP) oil spill, it's hard to imagine they'll escape completely form bearing some responsibility in the matter.

The courts have said sometime in 2011 they should reach a conclusion concerning that, although in some cases, like the blowout preventer provided by Cameron International, it's going to take some time to accurately investigate it to see where the failure came.

The recent conclusion of the oil spill commission that Halliburton provided an unstable cement mix used to seal the failed oil well puts pressure on these companies as to whether or not the indemnity agreements will hold under that type of scrutiny.

BP could be helped immensely if all of these companies would have to share in paying for the disaster, as since they've already been paying for almost everything, for them it would be money returned, which could dramatically improve their financial health whe spread across the companies mentioned above. It would be a game changer for them.

For the other companies mentioned above, there is more at risk though, as if they're considered negligent and liable in some ways, there is no doubt more lawsuits will emerge which will cost them and change their financial circumstances and reputation management will have to ensue.

There is also the increased costs of legal battles and insuring their debt via credit-default swaps.

So while BP, other than awaiting the final determination of whether or not they were grossly negligent in the accident, which could result in a fine of up to $17.6 billion, they have faced pretty much the worst case scenario and are coming out on the other side of it, as far as understanding their liabilities.

The other companies are now entering into the stage of uncertainty in relationship to liability, and that could weigh on the stocks for some time until that is cleared away.

Halliburton's role in the cement job reminds shareholders and investors that the situation is far from being resolved for all parties involved.


  1. halliburton, transocean, and cameron are not oil companies.

    those companies, in addition to anadarko, cannot be held liable for how bp's representatives (and in-town engineers) interpreted the negative pressure tests.

    let's say you take your car to ntb for an oil change. the service writer says there's a bubble in one of the tires and you might have a blowout on the highway and god forbid, it actually happens. are you telling me that you would expect ntb's insurance policy to cover what happened to you?

  2. no but if i just bought a tire and the tire blew out on the mototway i may go back to the manufacturer and say you sold me a crap tire that blew out because of the cheap rubber you made it out of

  3. One Word - Indemnify -
    meaning: to provide somebody with protection, especially financial protection, against possible loss, damage, or liability

  4. Just read the precise language of RIG's insurance clauses.
    Prepared by AAA lawyers, they are bullet proof
    it can be proved in court RIG commits CRIMINAL negligence - a virtual impossibility - no-one is even trying to go down that way

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