Transocean Will Pay $1.4 Billion for Gulf Spill

Offshore drill rig
Offshore drill rig

Transocean Ltd. (NYSE: RIG), the owner and operator of the Deepwater Horizon rig that exploded and burned in 2010, taking 11 workers' lives and dumping 5 million barrels of crude into the Gulf of Mexico, has agreed to pay $1.4 billion to settle outstanding civil and criminal claims against the company filed by the U.S. Justice Department. The company will also plead guilty to one misdemeanor count violation of the Clean Water Act. The settlement concludes the criminal investigation of Transocean.

The misdemeanor violation of the Clean Water Act will result in a $100 million fine against the company and Transocean will pay another $300 million to the National Academy of Sciences and the National Fish and Wildlife Foundation over the next several years to fund projects related to oil spill prevention and response in the Gulf of Mexico, and for natural resources and coastal habitat restoration.

The bulk of the payment, $1 billion, will settle civil claims against the company and will be paid over a period of three years.

A federal district court has ruled that Transocean was not liable for damages under the Natural Resources Damage Assessment process, but that ruling is being appealed and if the appeal is successful, Transocean may face additional penalties.

In November, BP plc (NYSE: BP) agreed to pay $4.5 billion to settle criminal charges related to the explosion of the Deepwater Horizon, and could still be liable for as much as $21 billion.

Shares of Transocean are up 6.9% following the announcement, at $49.42 in a 52-week range of $38.80 to $59.03. The company had reserved $2 billion to pay claims related to the charges that were settled today.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Commodities, Law, Oil & Gas Tagged: BP, Deepwater Horizon, Gulf of Mexico oil spill, Macondo well, RIG