Transocean to Pay $1.4 Billion for Deepwater Horizon Disaster
On 3 January 2013, the owner of the Deepwater Horizon rig, Transocean (NYSE:RIG) announced that it had reached an agreement with the US Department of Justice to resolve federal charges related to the Gulf of Mexico oil spill in 2010. The Switzerland-based company pleaded guilty to violating the Clean Water Act and agreed to pay $1.4 billion (£873 million) over a period of five years.
**Transocean Agrees to Pay $1.4 Billion**
Transocean owned the Deepwater Horizon rig, which exploded in 2010, killing 11 workers and triggering the biggest oil spill in US history. In its press release, Transocean said that it had agreed to pay $1.4 billion in fines, recoveries and penalties, excluding interest, with the settlement ending the Justice Department’s criminal investigation of the company.
“This agreement holds Transocean criminally responsible for its conduct,” noted US Attorney General Eric Holder, as quoted by Bloomberg, adding that the resolution was a significant step toward “justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster.”
In its press release, Transocean noted that it believed the settlement to be in the best interest of its shareholders and employees since it removed much of the uncertainty associated with the accident. Reuters reports that following the news, Transocean share price went 6.4 percent higher to close at $49.21 in New York. “The bottom line to me is they now can put away the big black cloud that has been hanging over them,” noted Phil Weiss, an oil analyst at Argus Research, as quoted by Reuters.
Although the settlement will remove the oil spill-associated uncertainty, Bloomberg reports that by pleading guilty to a violation of the Clean Water Act, Transocean and its affiliates may be subject to suspension from obtaining future US government contracts.
!m[Transocean Share Price Picks up With Uncertainty Resolved](/uploads/story/1127/thumbs/pic1_inline.png)
At the end of November 2012, the US Environmental Protection Agency (EPA) announced that it had temporarily suspended BP (LON:BP) from bidding for new US government contracts, with the suspension expected to last until the UK oil company could “provide sufficient evidence to EPA demonstrating that it meets Federal business standards.”
Transocean’s settlement comes after BP’s November agreement to pay $4.5 billion to resolve criminal and civil charges over the Deepwater Horizon disaster. BP, however, is expected to have to pay more to settle remaining civil claims, including the possibility of fines under the Clean Water Act.
And while Transocean admitted to playing part in the disaster, Halliburton Co (NYSE:HAL), which supplied cement intended to secure the Macondo well, remains the only company not to have settled. “Halliburton remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP’s specifications for its well construction plan and instructions,” said Beverly Stafford, a Halliburton spokeswoman, as quoted by Bloomberg.
In a statement, BP noted that Halliburton continued “to deny its significant role in the accident”.
**Transocean share price was 6.40 percent up at $49.20 as of 04 January 2013, 7:42 a.m. EST.**
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