BP Spill Settlement Trial Starts

As the latest trial kicks off, we believe a recent ruling further shields Transocean from Macondo-related liabilities

Stephen Simko, CFA 27 February, 2012 | 1:11PM
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Judge Carl Barbier last week issued a generally favourable ruling for Transocean (RIG) relating to three cross-motions for partial summary judgment regarding the liability of BP (BP.), Anadarko (APC) and Transocean under the Oil Pollution Act of 1990 and the Clean Water Act. Barbier ruled that Anadarko and BP are responsible for Oil Pollution Act liabilities for any subsea oil discharges, due to their status as responsible parties, but Transocean is responsible for any removal charges (likely relating to the cost of removing the rig). Transocean may also be responsible for any Clean Water Act liabilities relating to its role as an operator of the rig, while BP and Anadarko are liable for any civil penalties relating to the subsea oil discharges.

However, Barbier's commentary placed much of the responsibility for civil fines on Anadarko and BP rather than Transocean. We believe this ruling preserves the critical nature of the contractor-operator relationship and serves to further shield Transocean from Macondo-related liabilities. The trial is set to begin on February 27. We believe Transocean is operating from a position of relative strength for any settlement talks, which should help lower its ultimate financial exposure.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BP PLC466.25 GBX-0.01Rating

About Author

Stephen Simko, CFA  is a senior stock analyst at Morningstar.

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