Halliburton to Settle Deepwater Claims
Monday April 19, 2004 9:11 am ET
NEW YORK (Reuters) - Halliburton Co. has agreed to settle outstanding claims related to a deepwater project in Brazil and plans to take more losses on the project in the first quarter, the company said on Monday.###
The Houston company said its KBR engineering and construction subsidiary has agreed to amend existing agreements with project owner Petroleo Brasileiro SA regarding the Barracuda-Caratinga project, and release both parties from all existing claims, including pending arbitration proceedings in New York.
Halliburton is developing a deepwater off-shore and production complex for state oil company Petrobras. The project has been in dispute after cost revisions delayed a $2.5 billion order for two offshore oil rigs from Petrobras.
Petrobras agreed last year to pay $59 million of disputed claims and to take an additional $375 million of claims to arbitration in New York.
The agreement in principle announced on Monday is subject to project lender approval and final agreement.
If the parties are unable to reach a final agreement, Halliburton said it will pursue arbitration of its claim.
"The agreement in principle with Petrobras, if consummated, would significantly reduce remaining risks associated with this project, provide resolution to our claims and reduce the potential for significant late-delivery penalties," said Randy Harl, president and chief executive of KBR, in a statement.
Halliburton also said it will take additional operating losses on the project in the first quarter of about $62 million, or 14 cents a share. The additional charges stem from higher cost estimates, schedule extensions and other factors, it said in a release.