The Associated Press June 16, 2010, 10:42AM ET

Transocean: Drill ban no reason to end contract

Drilling rig operator Transocean said it does not believe that the six-month moratorium on deepwater drilling in the Gulf of Mexico is grounds for oil company Anadarko Petroleum to break its contracts to lease rigs in the Gulf.

Anadarko told Transocean and two other contractors this month that it will declare a "force majeure" on drilling rigs in the Gulf as a result of the moratorium.

Force majeure is a contract provision that frees parties from liability when an extraordinary event, such as a natural disaster or a war, occurs that could significantly disrupt business.

President Barack Obama imposed the moratorium after the Deepwater Horizon rig owned by Transocean and leased by BP exploded April 20, killing 11 workers and triggering what has become the worst oil spill in U.S. history.

Anadarko, based in The Woodlands, Texas, has a 25 percent non-operating interest in the well.

Transocean, in a regulatory filing on Tuesday, said it has rejected Anadarko's claim and is in discussions with the company. The company said several customers have either declared force majeure or have indicated that they may declare it.

"We do not believe that a force majeure event exists as a result of the drilling moratorium under the drilling contracts for the rigs in the U.S. Gulf of Mexico, and we are working closely with our customers to assess each situation," Transocean said.

Anadarko spokesman John Christiansen said Wednesday that the company stands by its position. "We believe our notification of force majeure was appropriate pursuant to our rights under the drilling contract due to the deepwater drilling moratorium and the Gulf of Mexico-specific nature of the contract, and we will continue to exercise all remedies we have under our drilling contract with Transocean," he said in an e-mail.

Transocean, based in Switzerland, said it has 14 rigs under contract in the Gulf and that it does not know the effect the moratorium will have its on operations.

In morning trading, shares of Transocean fell $1.34, or 2.8 percent, to $47.17.


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