UPDATE 4-Halliburton in Gulf spill settlement talks, stock jumps

Mon Apr 22, 2013 4:44pm EDT

* First phase of BP spill trial ended last week
    * BP had sought to shift blame for 2010 disaster
    * Excluding charge, Halliburton earnings top estimates
    * Believes worst of fracking pricing pressure behind it
    * Halliburton shares rise 5.6 percent


    By Braden Reddall and Kathy Finn
    April 22 (Reuters) - Halliburton Co is in "advanced"
talks to settle private claims against it in a trial to
determine blame for the 2010 Gulf of Mexico spill, the oilfield
services company said on Monday, as it booked a $1 billion
pretax charge for a possible deal.
    Disclosure of the "court-facilitated" talks in the last
month, which some legal experts tracking the BP trial linked to
a series of missteps with evidence presented by Halliburton
lawyers in the courtroom, helped push its shares up nearly 6
percent.
    The news came only days after the end of court proceedings
for the first phase of the trial over claims brought by the U.S.
government, Gulf Coast states, and private parties affected by
the worst U.S. offshore oil spill. The second phase, due to
start in September, will address exactly how much oil spilled.
    While Halliburton is not the subject of direct federal
government actions, BP Plc has tried to hold Halliburton
and rig owner Transocean Ltd partly responsible for
damages in the case. 
    Even with a private claims settlement, the exact scope of
Halliburton's liability will be unclear until the conclusion of
the multi-district litigation consolidated under Judge Carl
Barbier in New Orleans.
    Halliburton carried out the cement work on the Macondo well,
which spilled more than 4 million barrels of oil after the
blowout which destroyed the Deepwater Horizon rig and killed 11
workers.
    "Over the past month or so, we have participated in court
facilitated settlement discussions with some of the parties
included in the multi-district litigation, with a goal of
resolving a substantial portion of the private claims against us
in this matter," Chief Financial Officer Mark McCollum told
analysts on a conference call. 
    The company was not immediately available to comment
further.     
    Halliburton had a rough time at the trial over the past
month. First, it belatedly introduced cement samples into
evidence. Then the company's lawyers produced documents late and
prompted Judge Barbier to say he found their handling of the
matter "troubling," with a threat of sanctions.
    Legal experts following the case, speaking privately, said
the developments only added to the urgency of a settlement deal.
    Halliburton believed an "early and reasonably valued"
resolution was in the best interests of shareholders, and its
most recent offer included cash components payable over time as
well as stock, Chief Executive David Lesar said.
    "Discussions are at an advanced stage but have not yet
resulted in a settlement," Lesar said, explaining what amounts
to an after-tax charge of $637 million, which pushed the company
to a loss for the first quarter.
    The charge is based on where Halliburton is in the
negotiations, Lesar said. It is on top of a first-quarter 2012
charge of $191 million after taxes, or $300 million before
taxes. 
    The $1.3 billion reserve does not include any potential
insurance recovery. McCollum told the analysts the reserve may
be revised up or down, but executives declined to take further
questions about the possible settlement or trial on the call.
           
    'A SIGNIFICANT POSITIVE'
    Shares of Halliburton, the world's second-largest oilfield
services company, rose 5.6 percent to $39.29 on Monday.
    "A Macondo settlement would be a significant positive for
the stock," said UBS analyst Angie Sedita, adding that
Halliburton also got a lift in the first quarter from
higher-than-expected earnings in North America. 
    The company reported a first-quarter loss of $13 million, or
1 cent per share, compared with year-earlier earnings of $635
million, or 69 cents per share. Excluding the charge and other
items, it made a profit of 62 cents per share, ahead of the 57
cents analysts expected, according to Thomson Reuters I/B/E/S. 
    Revenue rose 1.5 percent to $6.97 billion.
    Revenue outside North America grew 21 percent, and
Halliburton said it had delivered better growth internationally
than its two rivals over the past year. On Friday, sector leader
Schlumberger Ltd and third-ranked Baker Hughes Inc
 posted higher-than-expected earnings. 
   
    Oilfield companies' pricing power, especially for equipment
used in hydraulic fracturing, has collapsed in North America as
the number of U.S. rigs targeting natural gas edges away from a
14-year low. But Baker Hughes said on Friday
that the declines in fracking equipment rates were starting to
taper off.
    Halliburton weighed in on Monday, saying pricing in general
might increase this year as customers adopt new technology to
improve well production and the "intensity" of services provided
per well increases, even as the rig count rises only modestly.
    "We believe the worst of the pricing pressure is behind us,"
said Chief Operating Officer Jeff Miller.
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