After the announcement Wednesday, Moody's Investors Service said it would review the ratings on Halliburton's senior unsecured obligations, shelf registrations and short-term debt. Moody's said it would also review the ratings of subsidiaries DII Industries, LLC -- formerly Dresser Industries -- and the guaranteed senior notes of Baroid Corp.

Under the proposed deal, Halliburton (HAL) would contribute up to $2.78 billion in cash, 59.5 million shares of stock currently worth about $1.2 billion, and notes in amounts to be determined, but with a net present value expected to be less than $100 million, to a trust "for the benefit of the present and future asbestos and certain other personal injury claimants," according to a press release.

"We view the news as very positive since all present and future claims are now included," said Jim Wicklund, a Banc of America oilfield services analyst. He reiterated his price target of $28 a share.

Analyst Pierre Connor III of Hibernia Southwest Capital, agreed. "It is definitely better to have this progressing toward settlement ... than it would be to have this thing drag on."

At last check, shares of Halliburton were down $1.10, or 5.4 percent, at $19.25.

The settlement will be implemented through a prepackaged Chapter 11 filing of two of Halliburton's wholly owned subsidiaries, DII Industries and Kellogg Brown & Root Inc., and certain of their subsidiaries. Halliburton would continue to own 100 percent of its subsidiaries.

"The proposed settlement agreement would result in the resolution of all of Halliburton's existing and future asbestos liabilities through a 524 (g) trust through a permanent injunction that cannot be revoked," Moody's wrote. "The proposed agreement would involve a legal restructuring of Halliburton."

Under the proposed agreement, Halliburton would retain the rights to the first $2.3 billion of insurance proceeds and any amount in excess of $3 billion.

Halliburton said it expects to file the Chapter 11 claims in the first quarter of 2003 and have the proceedings concluded within 90 days.

Of the $2.8 billion, $450 million will be due in four years on a subordinated basis if not paid sooner pursuant to a final and nonappealable court approved plan.

The company estimates that the total cost of settlement works out to about $3,000 per claim.

Halliburton said that all contracts and obligations would be honored and all creditors would be paid in full under terms of their agreements.

The settlement is subject to, among other things, financing commitments and approval from both the company's board of directors and the courts.

During its review, Moody's said it would consider whether Halliburton's financial position is sufficient to carry it through industry downturns; how the $2.8 billion in cash payments would affect the company's financial status, including the timing and the amount recoverable through insurance; and its liquidity situation.

The company said it was planning to host another conference call, with added details on the settlement, early in 2003.