Transocean Ordered to Quit Brazil
Offshore driller Transocean Ltd. (NYSE: RIG) said today that the company has been served with a temporary injunction by a federal court in Rio de Janeiro requiring that the company cease its Brazilian operations within 30 days. The order is the result of a November oil spill at an offshore field owned by Petrobras, or Petroleo Brasileiro S.A. (NYSE: PBR).
Transocean was the owner and operator of the Deepwater Horizon, which exploded in April 2010 killing 11 workers and dumped 5 million barrels of crude oil into the Gulf of Mexico.
Transocean operates 10 drilling rigs under contract in Brazil, 7 of which are doing work for Petrobras. If the company is finally forced to leave Brazil, Petrobras will have to stop its exploration and development activities in some of its most promising offshore fields. Neither the company nor the Brazilian government wants that to happen, and both have sided with Transocean to overturn the ban.
The spill, in Petrobras's Frade field, dumped 3,600 barrels of crude into the ocean northeast of Rio de Janeiro. None of the oil reached the shore and there was no visible environmental damage according the country's oil regulator.
In its announcement today, Transocean said that its Brazilian operations contribute about 11% of the company's total revenues. Based on its most recent quarterly report, that would amount to more than $280 million of the company's $2.58 billion in quarterly revenues.
The company said that it is "vigorously pursuing the overturn or suspension of the preliminary injunction, including through an appeal to the Superior Court of Justice."
Transocean's shares are off about 1% at $45.61 in a 52-week range of $38.21 to $60.09.
Filed under: 24/7 Wall St. Wire, Commodities, Law, Oil & Gas Tagged: BP, PBR, RIG