Updated from 7:03 a.m. ESTThe Scrooge just paid a visit to Halliburton. The Securities and Exchange Commission this week cut a Halliburton ( HAL) Christmas rally short by formalizing its investigation into the company's accounting practices. The SEC will now deepen its probe into the "cost-overrun" accounting techniques adopted in 1998, when Vice President Dick Cheney led Halliburton as chief executive. News of the investigation sent Halliburton's stock tumbling 4.9% to $18.55, as the market lost some confidence in the stock. Prior to the SEC's action, investors had been celebrating Halliburton's big-ticket gift to them: simple peace of mind. This week, Halliburton agreed to pay $4.1 billion -- just shy of the company's entire net worth -- to pay off hundreds of thousands of asbestos claims. Analysts freely admitted the settlement looked expensive. But they weren't letting sticker shock dampen their enthusiasm. "While 'price for peace' is high, we believe that it is worth it for Halliburton's shareholders," UBS Warburg wrote in a research note Thursday. "The settlement will allow the company to bring finality to this insidious and open-ended problem." Still, UBS is among a crowd of research houses still trying to determine just how much that peace will cost Halliburton shareholders. To satisfy all current and future asbestos claims, as proposed under the settlement, Halliburton must deliver $2.8 billion in cash and issue $1.2 billion worth of new stock as well as a note valued at up to $100 million. Of course, Halliburton doesn't plan to bankroll the entire package. The company expects insurance carriers to pitch in with reimbursements -- perhaps worth billions of dollars -- at some point. But the size and the timing of those payouts remain in question. "The insurance companies have become increasingly vocal and intransigent with regard to funding of asbestos settlements," Deutsche Bank wrote Thursday. "We believe that insurers may attempt to place onerous documentation requirements for individual claimants." Under its proposed settlement, Halliburton itself must fund the trust that will pay out claims to asbestos plaintiffs. The company can then seek to recover as much money as possible from its insurance carriers. It already has the right to recoup the first $2.3 billion paid out by the carriers, although the next $700 million will go into the trust for future asbestos victims. Halliburton can also attempt to collect further payments from the insurance companies, but some of them are already struggling financially. In the meantime, Halliburton's balance sheet and earnings are going to take a hit. The company has only $600 million to put toward the cash portion of its obligation. It also must issue 59.5 million new shares that will dilute earnings by roughly 12%. Under one worst-case scenario, painted by UBS Warburg, Halliburton could see earnings expectations drop from $1.16 to 78 cents a share in 2003 and from $1.51 to $1.08 a share in 2004. But both assumptions include absolutely no insurance recovery. "We do not think this will actually happen," stressed UBS, which rates the stock a buy. "We believe that Halliburton has a good shot at recovering at least $2.3 billion from its insurers over the next several years." But for now, Halliburton is faced with borrowing -- and paying interest on -- roughly $2 billion to satisfy the cash portion of its settlement. That additional financing could send Halliburton's debt-to-equity ratio flying from 33% to more than 45%. Already, terms of the settlement have put Moody's on edge. The ratings agency this week placed Halliburton's credit under review for a potential downgrade. A one-notch cut would immediately cost Halliburton $151 million in collateral calls. Again, insurance reimbursements could prove to be the wild card. "We believe that, if the company is able to recover at least $1.6 billion from the insurance companies, we would see no change in rating," Bank of America wrote Thursday. Those insurance recoveries would also boost the bottom line. UBS projects that every $1 billion in insurance reimbursements, if used to reduce debt, would flow through Halliburton's income statement to result in a 9-cent hike to profits. Given the likelihood of at least some insurance recovery -- and, more important, Halliburton's clean slate going forward -- most analysts are hotly recommending the stock this holiday season. Their cheerful outlooks differ sharply from the dark visions of a year ago, when massive asbestos awards took a 43% chunk out of Halliburton's share price in a single day. "As a result of hundreds of thousands of asbestos cases that came tumbling through Halliburton's door, the company itself got sick with the same illness that has bankrupted many companies in the past," CIBC World Markets wrote Wednesday. "Unlike others, Halliburton was able to cure itself with a resolution that we think is a positive for both the company and for shareholders."