Bloomberg News

Transocean Rises After U.S. Court Indemnity Ruling: Zurich Mover

January 29, 2012

Jan. 27 (Bloomberg) -- Transocean Ltd. rose the most in almost five months in Swiss trading after a U.S. court ruled that BP Plc must indemnify it for pollution-related economic damage claims related to the Macondo oil spill.

Transocean, based in Vernier, Switzerland, climbed as much as 9.3 percent in Zurich, its biggest gain since Sept. 6. The stock closed 0.9 percent higher at 43.83 francs while BP fell 2.6 percent in London to 464.55 pence.

BP can’t collect from Transocean part of the $40 billion in cleanup costs and economic losses caused by the 2010 oil well blowout and Gulf of Mexico spill, U.S. District Judge Carl Barbier in New Orleans ruled yesterday. BP must indemnify Transocean for pollution-related economic damage claims under its drilling contract, Barbier said.

The judge’s comments “are supportive for Transocean,” Theepan Jothilingam, an analyst at Nomura Holdings Inc., wrote. “For BP, the picture is less clear.”

BP, which is London-based, sued Transocean in April to recover a share of its damages and costs from the spill.

Barbier said he would defer ruling on “BP’s arguments that Transocean breached the drilling contract or committed an act that materially increased BP’s risk or prejudiced its rights.”

The decision “implies that Transocean is not responsible for cleanup costs, or claims that were paid directly by BP from the trust fund,” the analyst wrote today in a note. At the same time, “our understanding is that this means BP’s lawsuit against Transocean still stands and that Transocean therefore still faces potential fines and penalties including that of the Clean Water Act.”

The April 2010 Macondo well blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The sinking of Transocean’s Deepwater Horizon drilling rig and spill led to hundreds of lawsuits against BP, its partners and contractors.

Link to BP News: BP/ LN <Equity> CN <GO>

--With assistance from Randall Hackley in Zurich. Editors: Randall Hackley, Amanda Jordan

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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