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Transocean (RIG) To Pay $1.4B Over Deepwater Horizon Settlement

 January 03, 2013 02:15 PM
 


(By Balaseshan) Transocean Ltd. (NYSE: RIG) said its unit has agreed to plead guilty to violating the Clean Water Act (CWA) for negligent discharge of oil into the Gulf of Mexico and pay a total of $1.4 billion in fines, recoveries and penalties.

Transocean has reached an agreement with the U.S. Department of Justice to resolve certain outstanding civil and potential criminal claims against the company arising from the April 20, 2010, accident involving the Deepwater Horizon in the Gulf of Mexico.

The criminal information, and a proposed partial civil consent decree to resolve the U.S. government's civil penalty claims against Transocean Deepwater Inc. and related entities were filed today in U.S. District Court in the Eastern District of Louisiana.

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The resolution will result in the Department of Justice concluding its criminal investigation of Transocean and settling its claims for civil penalties against the company relating to the spill from BP's Macondo well.

The company plans to satisfy its payment obligations over a period of five years, using cash on hand and cash flow from operations. At September 30, 2012, Transocean had accrued an estimated loss contingency of $1.5 billion associated with claims made by the Department of Justice.

As part of the plea agreement, Transocean Deepwater Inc. has agreed, subject to the court's approval, to pay $400 million in criminal fines and penalties and to continue its on-going cooperation in the government's criminal investigation.

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In addition, pursuant to the terms of a proposed partial civil consent decree also lodged with the court today, Transocean Ocean Holdings LLC, Transocean Offshore Deepwater Drilling Inc., Transocean Deepwater Inc. and Triton Asset Leasing GMBH have agreed to pay an additional $1 billion to resolve federal CWA civil penalty claims for the massive, three-month-long oil spill at the Macondo Well and the Transocean drilling rig Deepwater Horizon.

The Department of Justice has agreed that it will not pursue further prosecution of Transocean Ltd. and certain of its subsidiaries for any conduct regarding any matters under investigation by the Deepwater Horizon Task Force relating to or arising out of the Macondo well blowout, explosion, spill or response.

Transocean has agreed to continue to operate with the Deepwater Horizon Task Force in any ongoing investigation related to or arising from the accident. The civil and criminal agreements are subject to court approval and, in the case of the civil agreement, public notice and comment.

According to court documents, on April 20, 2010, while stationed at the Macondo well site in the Gulf of Mexico, the Deepwater Horizon rig experienced an uncontrolled blowout and related explosions and fire, which resulted in the deaths of 11 rig workers and the largest oil spill in U.S. history.

RIG is trading up 7.46% at $49.69 on Thursday. The stock has been trading between $38.80 and $59.03 for the past 52 weeks.

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