Halliburton balks at telling U.S. early of major deals
WASHINGTON (Reuters) - Halliburton Co, which did the cement work for the BP Plc oil well that ruptured, has balked at an Obama administration request to provide advance notice of major transactions it may make, while Transocean Ltd said it would provide some details.
The Justice Department in June asked BP, which owns the well that spewed millions of barrels of oil into the Gulf of Mexico, Halliburton and other companies to give advance notice of any major transactions they plan to make, like asset sales or cash payments including dividends.
The request was made because of concerns that the companies might not have the funds to pay for any penalties or liabilities from clean up and recovery efforts, especially after news surfaced about Transocean's $3.3 billion stock repurchase program and a $1 billion stock dividend program.
A lawyer for Halliburton told the Justice Department that the company's board of directors considered the request and after weighing the views of its lawyers and management, decided not to comply.
"While Halliburton unhesitatingly undertakes to comply with all its legal obligations, it cannot bind itself to restrictions that have no demonstrated basis in law or fact," the lawyer Jeffrey Turner said in a July 16 letter to the Justice Department.
The letter was obtained by Reuters under the Freedom of Information Act request.
That said, Turner told the Justice Department that Halliburton was "not currently contemplating any actions outside of the normal course of business that would involve substantial transfers of cash or other corporate assets."
The Justice Department is investigating several companies tied to the ruptured oil well to determine which are liable for criminal and civil penalties that could reach billions of dollars.
BP has already agreed to set up a $20 billion escrow fund to cover the costs of cleaning up the oil spill and compensating those who suffered financial losses as a result of the massive spill that poured 4.1 million barrels of oil into the Gulf of Mexico.
TRANSOCEAN AGREES TO PROVIDE SOME DETAILS
Meanwhile a lawyer for Transocean, which drilled the well for BP, said in a July 23 letter to the Justice Department the company would work to assure the Obama administration that it could pay for any liabilities related to the spill.
"Transocean will work with you to assure DOJ that it has the financial ability -- including significant insurance coverage and cash reserves in the United States -- to satisfy what defined liabilities can reasonably be expected to arise from the April 20 incident," said lawyer, Brad Brian.
The letter was also obtained by Reuters in a Freedom of Information Act request.
Brian said Transocean would not repurchase more of its own shares without first giving the Justice Department 30 days notice. The company has spent $239 million so far on the program and has not bought any shares since May 7.
Transocean also wanted further discussions with the Justice Department about advance notice for significant cash payments its U.S. entities may make, but agreed in the interim to give 30 days notice for "significant cash payments apart from ordinary course of business payments," Brian said.
The company also agreed to provide the Justice Department with information about the financial operations of its U.S. operations.
(Editing by Alan Elsner)