NEW YORK -- Halliburton agreed to pay $1.1 billion to settle what it calls "a substantial portion" of plaintiff claims arising from the 2010 BP oil spill in the Gulf of Mexico.
The settlement, if approved by a federal court, would allow businesses and property owners who were hurt by the oil spill to collect punitive damages from Halliburton through a fund to be administered by a court-appointed representative. These plaintiffs will receive or have already received compensation for their economic loss through a separate settlement with BP.
Halliburton and the plaintiffs had been waiting on the court to decide to what extent Halliburton was responsible for the blowout of the Macondo well and the subsequent explosion of the Deepwater Horizon drilling rig. Halliburton was BP PLC's cement contractor on the project. The accident killed 11 workers and led to the biggest oil spill in U.S. history.
"It's a very reasoned compromise to a set of complex legal question at a time of uncertainty," said Joe Rice of the law firm Motley Rice, which has been working for the plaintiffs.
The deal is contingent upon a minimum number of plaintiffs signing on. If a federal judge decides that gross negligence on the part of Halliburton was a major factor in the accident, plaintiffs could decide instead to hold out for a larger award. Halliburton would likely then challenge that ruling, leading to further delays in payments of punitive damages.
If the judge decides instead that Halliburton's actions were not a major factor, the plaintiffs would have locked in at least some punitive damages.
Halliburton shares fell $1.21, or 1.8 percent, to $66.38 in morning trading.
In January, a former Halliburton manager was sentenced to one year of probation for destroying evidence in the aftermath of the oil spill.