Shares for oilfield services company Halliburton (HAL) were positively bubbly heading into midday trading on Friday, edging very close to the top end of the stock’s 52-week range at $46.50.
Halliburton posted earnings this past Monday, and though the company beat on top and bottom lines, its stock dropped slightly, perhaps due to the fact that domestic revenue for the second quarter was down 8 percent, while the most significant revenue growth, 12 percent, took place in the Middle-East and Asia, where increasingly unpredictable political and economic situations make for an uncertain future. It did not help matters that other, larger companies in the industry such as Schlumberger (SLB) reported earnings that were far more impressive.
But whatever increase investors may have expected on Monday after the company’s earnings report was released was adequately compensated for on Friday, with shares up nearly 4 percent. The catalyst for this movement, however, is perhaps not what one would expect.
Indeed, on Friday the company pleaded guilty to destroying evidence related to the explosion at the Macondo Prospect well that resulted in the death of 11 rig workers, the dumping of over 200 million gallons/5 million barrels of oil into the Gulf of Mexico, and the despoiling of miles of Southern US coastlines along with the businesses and ecologies that depend on them.
Along with the guilty plea, Halliburton will have to pay a fine of $200,000, a vastly insignificant portion of its nearly $2 billion yearly income. But the deal was sweetened by the fact that the Department of Justice has agreed to not pursue any other criminal charges against the company related to the oil spill.
Halliburton has navigated a variety of scandals over the years. In 2009 , it was revealed that a former subsidiary of the company, KBR (KBR) , did shoddy electrical work that led to the electrocution deaths of at least a dozen US soldiers in Iraq. KBR was still part of Halliburton when the work was done, and the company received over $80 million in bonuses for the work from the Department of Defence. In this instance as well, the company denied all accountability for the deaths, though there is considerable evidence that it knew that many of its electricians were not adequately trained to build the infrastructure needed by the military. Halliburton has been one of the largest corporate beneficiaries of the protracted wars in Iraq and Afghanistan.
The bump in shares on Friday has also been attributed to the company’s simultaneous announcement of the board’s approval of a $3.3 billion share buyback program. Halliburton's shares are up nearly 30 percent in 2013.
[Image Courtesy of Wikimedia Commons]