By TOM FOWLER
Transocean will pay $1.4 billion to settle all federal civil
and criminal issues relating to the 2010 Deepwater Horizon
accident in the Gulf of Mexico, the US Department of Justice
said Thursday afternoon.
Transocean was the owner of the Deepwater Horizon drilling
rig that exploded in April 2010, killing 11 workers and
triggering the largest offshore oil spill in US history.
It will plead guilty to one criminal misdemeanor violation
of the Clean Water Act for failing to properly monitor the well
at the time of the blowout and pay a $100 million fine,
according to documents filed Thursday.
The company will also pay $1 billion in fines for civil
violations of the Clean Water Act. Additionally, it will pay
$150 million each to the National Fish and Wildlife Foundation
and the National Academy of Sciences for oil spill response and
The Wall Street Journal reported the settlement
earlier Thursday, citing people familiar with the matter.
"This is a positive step forward, but it is also a time to
reflect on the 11 men who lost their lives aboard the Deepwater
Horizon," Transocean said in a statement. "Their families
continue to be in the thoughts and prayers of all of us at
The Swiss offshore drilling contractor said previously in
Securities and Exchange Commission filings that it had
discussed a $1.5 billion payment with the Justice Department to
resolve the civil and criminal claims. It has set aside a $2
billion noncash reserve for all Deepwater Horizon-related
Analysts with Wells Fargo Securities called the settlement a
likely surprise for Transocean investors who were worried the
spill related liability could grow.
"We think the quantification of the liability should give
ratings agencies more comfort in rating RIG's debt," Wells
Fargo analysts said in a note to clients, referring to the
company's stock abbreviation.
Oil giant BP, which had been leasing the Deepwater Horizon
to drill an exploratory well in the Gulf of Mexico and was
primarily in charge at the time of the accident, agreed to pay
$4.5 billion in November to settle all criminal and some civil
charges related to the accident.
The case against BP included 11 felony counts of "seaman's
manslaughter" and a misdemeanor violation of the Clean Water
BP must still contend with civil Clean Water Act violations,
which could total more than $20 billion. If BP agrees to settle
the civil violations the payments would likely be much less.
But if it chooses to fight the claims in court, it could face
fines of $4,300 for each of the estimated 4.9 million bbl of
oil spilled if the company is found to have been grossly
Tom Claps, an analyst with Susquehanna Financial Group, said
Transocean's settlement could be seen as a positive for BP
since it does not include language that Transocean was grossly
negligent in connection with the spill.
"The Justice Department said repeatedly in filings that both
Transocean and BP were "grossly negligent" in their conduct,"
Mr. Claps said. He added that if the DOJ concluded Transocean
was merely negligent, "it would improve the chances that BP
would also just be called negligent and could mean their Clean
Water Act fines would be much smaller than many have
Dow Jones Newswires