Will Market Punish Halliburton (NYSE:HAL) Over Potential Liability in BP (NYSE:BP) Cement Job?

Some analysts are attempting to circle the wagons around Halliburton (NYSE:HAL) after the devastating conclusion from the National Commission on the BP Deepwater Horizon Oil Spill, concluded the cement mixture used to seal the Macondo well of BP's was unstable.

Questions as to whether or their indemnity agreement with BP will hold is being bantered about, along with potential exposure to lawsuits which could weigh on the company for years if Halliburton isn't able to wiggle its way out of this.

At this time there is uncertainty because of the mixed reports, with some implying the mixtures being tested were different than the actual mixture used by Halliburton, although independent tests from Chevron (NYSE:CVX) ended up with the same conclusion, that the mixture was indeed unstable and shouldn't have been used.

The worst case scenario so far is Halliburton could be on the hook for fines and/or fees as high as $2 billion. That wouldn't include paying BP anything or lawsuits which would inevitable come about from the incident.

Halliburton's job will be to counter the allegations and conclusions in order to clear themselves of wrongdoing. If they can't, there will definitely be far more liability incurred by them than just though a week ago.

Halliburton’s (NYSE:HAL) Shares Hammered After BP (NYSE:BP) Cement Report

There is no way to get around the potentially devastating report from the National Commission on the BP Deepwater Horizon Oil Spill, where Halliburton (NYSE:HAL) had the conclusion drawn that the cement they recommended using was unstable.

An independent investigation from Chevron (NYSE:CVX) performed on behalf of the commission reached the same conclusion, as well as did an internal investigation from BP.

Credit-default swaps almost immediately rose in price for Halliburton right after the news, and their stock got hammered, and will continue to be under pressure because of the unknown liabilities associated with the findings.

Whatever it is, in the short term Halliburton is in trouble, and that isn't going to change anytime soon.

The share price of Halliburton plunged to $31.68 at close, losing $2.74, or 7.96 percent, and continued to drop after hours.