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By David Ivanovich
Houston Chronicle Knight Ridder/Tribune Business News

Apr. 6--WASHINGTON - The Supreme Court on Monday refused to hear an appeal from Halliburton Co. of a $106 million judgment won by BJ Services.

The high court's action lets stand a lower court ruling that Houston's Halliburton encroached on Houston-based BJ Services' patent for a fluid used in hydraulic fracturing.

Two years ago, a Houston jury found in BJ's favor and awarded the company $98 million. Last August, a three-judge appeals court panel upheld that decision.

Halliburton appealed to the high court, which -- without comment -- declined to take the case. With interest, the original jury award's value has risen to $106 million, BJ Services officials said.

"This has been a long situation," BJ Services Chief Executive Officer Bill Stewart said in an interview.

Fracturing is a process used to boost production from oil and gas wells by pumping liquids into the ground at high pressure to help break open the underground formation. The companies in this field compete based on technical advances.

BJ Services filed suit in March 2000 accusing Halliburton of copying BJ's Vistar system.

Halliburton officials contended the patent was invalid.

Halliburton spokeswoman Wendy Hall said the company "has replaced the technique with more advanced technology and has not been using this fracturing method since April 2002.

"We expect to maintain our leadership position in the fracturing business," Hall said. "Halliburton pioneered fracturing more than 50 years ago and continuously develops new and innovative products and services."

Halliburton shares dropped 64 cents Monday to close at $29.38 on the New York Stock Exchange, while BJ Services shares dipped 10 cents to end the day at $42.21.

The Supreme Court decision will have no impact on the company's 2004 financial results, because Halliburton set aside the money to cover the award in 2002, company officials said.

BJ Services will enjoy a gain totaling $55 million to $58 million, after attorney's fees and taxes are deducted.

Standard & Poor's Ratings Services said the news, while "favorable for credit quality because it further strengthens the company's already strong financial profile" will not affect the company's credit rating.

"Relative to BJ Services' year-end 2003 debt levels (about $500 million), the cash proceeds are not material enough to merit" a ratings outlook change, S&P said.

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