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Judge releases Halliburton cement to government


Oil is burned off the surface of the water near the source of Deepwater Horizon oil spill, off the Louisiana coast, July 13, 2010. REUTERS/Lee Celano
Oil is burned off the surface of the water near the source of Deepwater Horizon oil spill, off the Louisiana coast, July 13, 2010. REUTERS/Lee Celano

By Anna Driver

HOUSTON (Reuters) - Federal investigators will have access to materials Halliburton Co used in the cementing job on BP Plc's blown-out Gulf of Mexico well after a New Orleans federal judge overseeing litigation related to the disaster ordered its release.

The move came a day after a government panel said Halliburton had used flawed material to cement the well.

Halliburton was hired by BP to seal the Gulf of Mexico well, which ruptured on April 20, killing 11 workers who were on the Transocean Ltd rig contracted to drill it. The disaster caused the worst offshore spill in U.S. history.

The judge previously ordered the material preserved for his cases, but now is being advised by Halliburton the cementing materials may be deteriorating.

"No destructive testing on the cementing components will be conducted without further order of the court," Judge Carl Barbier wrote in his October 27 order, released on Friday.

Halliburton "will comply immediately" with the judge's order, Cathy Mann, a Halliburton spokeswoman said in a statement.

A White House panel investigating the cause of the well blowout criticized Halliburton's cement job in a letter and report released on Thursday, saying the company knew the material was unstable.

The panel's report unleashed a wave of investor worry that Halliburton might be liable for costs related to the disaster and sent its shares down as much as 16 percent on Thursday.

The shares closed up 18 cents or at $31.86 on Friday.

"It would be a concern to a shareholder, that when you start spreading the fault around, a portion could fall on Halliburton," Carl Nelson, a Florida lawyer who is an expert on maritime spill matters. "But that's a long way down the road."

Nelson represents clients with claims related to the spill, but is advising them to settle with BP through the $20 billion fund administered by Kenneth Feinberg, he said.

SHARES RECOVER

On Friday, Halliburton's shares recovered as analysts characterized Thursday's stock drop as overblown, pointing to the company's strong indemnification clause in its contract with BP.

"Just like Chucky the horror movie doll, Macondo just won't go away," Houston-based energy research firm Tudor, Pickering Holt and Co said in a note to clients on Friday.

"(The) letter to presidential commission from investigating law firm brought cement quality issue back into play as variable, taking $2.5 billion out of Halliburton's market cap in the process."

The report could cause some analysts to back away from Halliburton shares and some diversified portfolio managers to sell, said Tudor, Pickering.

That would be a mistake, the research firm added, because Halliburton has strong indemnity in place.

The drop in Halliburton's stock was "ridiculous" because BP, as operator of the project, had the final say on the job, Capital One Southcoast said in its morning note to clients.

Halliburton also vigorously defended its actions in a lengthy statement issued Thursday night, saying there were significant differences between the company's tests on the cement used in the Macondo well and the government's tests.

Halliburton said responsibility for the disaster lies with BP, saying the British oil major did not perform a key test to determine the integrity of the cement work.

"BP, as the well owner and operator, decided not to run a cement bond log test even though the appropriate personnel and equipment were on the rig and available to run that test," Halliburton said in its statement.

(Reporting by Anna Driver in Houston; additional reporting by Jonathan Stempel in New York; editing by John Wallace and Andre Grenon)

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