Shares of Transocean (RIG) skyrocketed on the news the company reached a $1.4 billion settlement agreement with the United States Justice Department over the failure of the oil rig - the Deepwater Horizon.
Transocean, which is based in Switzerland, agreed to pay $1 billion in civil penalties and $400 million in criminal penalties. Also according to the court filing, Transocean plead guilty to violating the Clean Water Act of the United States.
The company stated, "These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident. 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. Their families continue to be in the thoughts and prayers of all of us at Transocean."
As for the stock performance of the company, it removal of the uncertainty does help investors and shareholders a more complete look as to the consequences of the accident, which could continue to push the share price up over time.
Transocean had set aside $2 billion to meet the expected costs associated with the drilling rig failure.
The Justice Department has given Transocean two years to pay the $1 billion. The deal still must be approved by a federal judge to be official.
Transocean because of the lack of clarity on its liabilities connected to the failed oil rig, lost about $5.7 billion in 2011.
Shares of Transocean were trading up by $3.51, or 7.59%, as of 2:03 PM EST.
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