Halliburton Drops as U.S. Panel Cites Knowledge of Unstable BP Well Cement

By Nikolaj Gammeltoft - Oct 28, 2010 10:47 PM GMT+0100

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Storage tanks stand at a shorebase for Halliburton Co., the company that poured cement to line BP Plc's leaking oil well in the Gulf of Mexico, stands in Venice, Louisiana. Photographer: Derick E. Hingle/Bloomberg

Halliburton Co., the world’s second- largest oilfield-services provider, fell the most in five months after a government report said cement the company recommended to seal BP Plc’s Gulf of Mexico well was unstable and may have contributed to the largest U.S. offshore oil spill.

Halliburton, which reached a two-year high on Oct. 15, plunged 8 percent, or $2.74, to close at $31.68 in New York Stock Exchange composite trading with 97.8 million shares changing hands today, the most since March 2007.

The stock fell after the National Commission on the BP Deepwater Horizon Oil Spill said documents provided by the Houston-based company showed at least three tests of the cement, in February and April, found the mixture for the doomed Macondo well unstable. BP received data from at least one test in March, the commission staff said in a letter today.

“Halliburton and BP both had results in March showing that a very similar foam slurry design to the one actually pumped at the Macondo well would be unstable, but neither acted upon that data,” according to a letter sent to the commissioners from the panel’s chief counsel Fred Bartlit and other staff members.

The national commission, headed by former U.S. Senator Bob Graham and William Reilly, the one-time head of the U.S. Environmental Protection Agency, will hold hearings on the preliminary findings of its investigation on the cause of the April 20 oil-well blowout in Washington Nov. 8 and Nov. 9.

Anadarko Slips

London-based BP, which was the biggest producer of oil and gas last year when it beat Exxon Mobil Corp. for the first time, rose 1.3 percent to $40.60 in U.S. trading. Anadarko Petroleum Corp., the Texas oil company that owns a 25 percent stake in BP’s well, lost 1.3 percent to $61.77.

Credit-default swaps on Halliburton’s debt surged the most since June. Contracts on Halliburton climbed 27.3 basis points to 87.2, at 4:30 p.m. in New York, according to data provider CMA. The cost to protect the company’s debt nearly tripled in June, reaching as high as 219.4, CMA data show. Investors use credit default swaps to protect buyers protect from losses on corporate debt or speculate on credit worthiness.

To contact the reporter on this story: Nikolaj Gammeltoft in New York atngammeltoft@bloomberg.net;