Transocean (RIG) Soars on $1.4 Billion Settlement Agreement

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.

BP (NYSE:BP) Surpasses $500 Million in Gulf Oil Spill Costs

According to reports from congressional auditors, BP Plc (NYSE:BP) has now paid out over $500 million for costs related to the cleanup of the Gulf of Mexico after the oil spill starting from the explosion on the Deepwater Horizon oil rig.

This shouldn't be confused with the Gulf Coast Claims Facility, which is the one run by Kenneth Feinberg and has paid out far more than the over $500 million paid from the federal oil spill fund. The Gulf Coast Claims Facility is the $20 billion fund BP has promised to pay claims out of over a four-year period.

The fund is question is called the Oil Spill Liability Trust Fund, where capital is raised through a tax of 8 cents a barrel of oil.

The Government Accountability Office said that fund is running out of money, and as it stands, can't extract more than $1 billion from any one company over any one incident.

As of the end of September, over $1.6 billion was still in the fund, but concerns are it'll very soon reach the $1 billion limit, and no more funds will be able to be dispersed.

This is the existing rule even if a company reimburses the government fund and there are funds available to pay out.

At this time Congress is thinking about removing the $1 billion cap and introducing legislation which would offer a more flexible cap where the money paid by an oil company over an accident wouldn't be included in the limits now constraining the fund.

BP's (NYSE:BP) Well Has Commemoration Star for 11 Workers Killed

After another round of testing to ensure the BP (NYSE:BP) well was completely plugged, a cap of a star with 11 points on it was placed on the well in remembrance of the 11 workers who lost their lives when the Deepwater oil rig exploded.

U.S. Coast Guard Rear Admiral Paul Zukunft said the cap was installed on November 8 after final testing was completed.

Zukunft added that cleanup efforts continue along the coastline and is focusing on marshes and beaches at this time. About 9,000 people continue to work on the cleanup.

"Some of our more persistent oil is in that sand column on both recreational beaches and also on national park shorelines," said Zukunft. "In some cases it is either removed manually or we are using heavy equipment."

BP (NYSE:BP) Sells Gulf Assets to Japan's Marubeni

BP (NYSE:BP) to divest of non-core assets to raise capital to pay for its mounting liabilities from the Deepwater Horizon oil spill in the Gulf of Mexico.

This time the oil giant has sold four fields in deepwater areas in the Gulf of Mexico to Marubeni of Japan, for $650 million. This will bring the total amount raised through selling of assets to over $12 billion. BP wants to raise about $30 billion overall to cover itself for existing and potential liabilities.

The specific fields sold are the Merganser, Magnolia, Nansen and Zia fields, which combined produce about 15,000 barrels of oil equivalent per day of oil and gas.

Evidently, BP would have sold these assets whether or not they oil spill happened: "When BP acquired Devon's Gulf of Mexico assets it was clear that these four fields did not fit well with the rest of our business in the region," said Andy Hopwood, vice president for Strategy and Integration.

The deal is expected to close in the early part of 2011.

Government Corruption Caused BP (NYSE:BP) Oil Spill, Testimony

The recent testimony of William Reilly of the National Committee on the BP Deepwater Horizon, asserted the BP (NYSE:BP) oil spill from the explosion on the Deepwater Horizon oil rig was caused by government corruption, rather than simply being an accident.

Reilly blamed the "accident" on the government and its regulatory agencies like MMS refusing to enforce or implement basic safety practices and measures.

Reilly said, “We have found that the industry has distorted and impeded effective rule making and prevented rules from being made.”

In other words, Reilly claims the government and industry are working together against safe drilling.

“The regulatory and inspection process has been subject to political and industry pressure. The industry has successfully sought congressional intervention to prevent implementation of mms rule making,” concluded Reilly.

As long as lawmakers and the oil industry are in bed together, safety issues will not be properly addressed and more oil spills could happen in the future in the Gulf of Mexico, according to Reilly.

BP (NYSE:BP) Hands Off Babysitting Chavez to Russians

While the divestiture of BP (NYSE:BP) assets in Venezuela are part of the strategy of the oil giant to raise $30 billion to pay for mounting liabilities from the Gulf of Mexico oil spill from the explosion aboard the Deepwater Horizon oil rig, a secondary benefit comes with it: No longer having to deal with the volatile and unpredictable Hugo Chavez.

Even though BP is a 50-50 partner in TNK-BP, their joint venture with a group of Russian billionaires, they'll retain benefits of the assets, but not have to deal with, for the most part, the operational headaches that come with doing business in Venezuela.

That doesn't include the $1.8 billion BP raised from the deal to serve its liability goals.

Another nice benefit in this is if the business in Venezuela is taken over or fails for some reason, BP already enjoys the $1.8 billion that came with the deal, putting them ahead of the game.

Overall it's a smart deal for them.

BP (NYSE:BP) Oil Rig Too Busy Before Critical Operations Says Contractor

Just about every type of alleged lax condition was on the Deepwater Horizon oil rig operated by BP (NYSE:BP) leading up to the explosion which killed 11 workers and dumped large amounts of oil into the Gulf of Mexico, according to a seemingly endless string of witnesses.

The latest assertion is about an hour before the Deepwater Horizon oil rig exploded, it was so busy on the rig it was hard to monitor vital data.

That was from a Halliburton (NYSE:HAL) support services coordinator testifying before a investigative panel of the federal government.

According to John Gisclair, pressure rose sharply before the incident and a sharp drop in pressure a little while later. That may have indicated something wrong was going on, said Gisclair.

Allegedly one worker communicated to Gislclair that there were so many things going on at the same time that it was very hard to figure out what was happening.

This was part of the ongoing series of hearings by the joint U.S. Coast Guard-Bureau of Energy Management, Regulation and Enforcement investigative panel.

Blowout Preventer from BP (NYSE:BP) Oil Spill Still Sitting Around

One of the key pieces of evidence related to the BP (NYSE:BP) oil spill, the blowout preventer, is still sitting around after being lifted from the bottom of the Gulf of Mexico after the explosion on the Deepwater Horizon oil rig.

Cameron International (NYSE:CAM) produced the blowout preventer which failed to stem the flow of oil and gas as it was supposed to do in these types of situations.

It has been a month since the device was moved to a government facility to be examined, but in its usual incompetence, has done nothing to examine the causes of the failure of the device which is one of the main pieces of evidence in how fines and/or distribution of liabilities will be assessed.

So you have all these lawsuits and claims being made without the blowout preventer having even been examined.

The reason for the delay according to federal officials, is they are waiting for the approval of the procedures they'll use to do the testing. Court records reveal a multi-agency team will make that determination. How long can it take these "brains" to determine something as simple as that?

Testing on the blowout preventer was supposed to have began by October 1, and it's uncertain as to how much more time will be wasted before a determination as to the procedures used will be made.

The device is sitting in a NASA facility in New Orleans.

BP (NYSE:BP) Was Ready to Abandon Macondo Well Only Days Before Accident

Even before the disastrous explosion which rocked and destroyed the Deepwater Horizon oil rig operated by BP (NYSE:BP), the oil giant reportedly was ready to abandon the well just days before the accident.

Testifying before a federal investigative panel today, that was the assertion of BP engineer Grew Walz.

Evidently the engineers on the project weren't sure as to how to go ahead with a pressure test before the accident occurred. That seemed to bring BP to the point of dropping the Macondo well project. They now wish they had.

In other testimony, it came out that BP's time-frame concerning how long it would take to install another 15 centralizers was longer than the technician who was going to do the work.

BP has said it would have taken about 10 hours, while the technician stated it would have only taken about 4 to 8 hours.

BP (NYSE:BP) Challenged on Installation Time of Centralizers

BP (NYSE:BP) has said it in the past when making a decision on how many centralizers it would need to operate the well successfully, that it would have taken a lot of time to install the 21 recommended by Halliburton (NYSE:HAL).

That assumption was challenged by a technician, who was bringing the centralizers to the Deepwater Horizon oil rig to be installed. BP said it would take at least 10 hours to install them, while the technician said would have only taken from 4 to 8 hours.

A centralizer is what keeps the casing centered in the well bore. That means if it isn't placed correctly, gas and oil would escape from the well.

Instead of the installation of 21 centralizers, BP opted to go with only 6, which could have been a major problem in the well ending up causing an explosion.

Testifying at the joint U.S. Coast Guard-Bureau of Energy Management, Regulation and Enforcement investigative panel, technician Daniel Oldfather said he was told the job had been cancelled by BP, but wasn't given the reason.

Transocean (NYSE:RIG) Has Class Action Lawsuit Filed Against Them

Owner of the Deepwater Horizon oil rig involved with the BP (NYSE:BP) oil spill, Transocean (NYSE:RIG), had a class action lawsuit filed against them by Scott+Scott LLP, which includes their former CEO and the former CEO of GlobalSantaFe Corporation, which they merged with.

Their press release stated:

"The complaint in this action alleges that, on October 2, 2007, in advance of a planned shareholder vote regarding the proposed merger of Transocean and GlobalSantaFe, Defendants disseminated a proxy statement to the Class that contained untrue statements of material facts and omitted to state material facts necessary to make the statements that were made not misleading in violation of §14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder. Specifically, Transocean is
alleged to have misrepresented the quality of its drilling fleet and its safety practices. In fact, as was first revealed by the Deepwater Horizon disaster and its aftermath, Transocean was dramatically underinvesting in safety and exposing itself to a high risk of a catastrophic event. The false proxy induced the Class to approve the merger with Transocean for inadequate consideration, thereby harming the Class."

The lawsuit was filed against Transocean on September 30, 2010.

Contractor Claims BP (NYSE:BP) Got in the Way of Important Operations

BP was accused of interfering in operations which were considered a vital part of attempting to shut down the oil spill leaking into the Gulf by the president of Smit Salvage Americas, Doug Martin.

After the explosion the Deepwater Horizon oil rig, Smit Salvage was hired in an attempt to save the rig.

"When they wanted to calculate the heat load on the boat, I said, 'How do you know how hot the fire is?'" Martin asserted to the joint U.S. Coast Guard-Bureau of Energy Management, Regulation and Enforcement investigative panel. "I had a hard time believing there was data available at that time to do that. That's why I felt it was better just to keep the boat cool and use common sense tools to get the ROV in the water."

BP said through a spokesman that the reason for their actions was to ensure the safety of the people on the rig.

The dispute was over lowering a underwater robot which was going to be used to close the blowout preventer, the last line of defense against oil spilling into the Gulf.

When lawyers questioned Martin he wilted and wasn't as confident in his assertions when he had the floor to himself.

BP (NYSE:BP) Oil Spill Doesn't Slow Down Offshore Oil Exploration, Drilling

All around the world the huge demand for oil continues to generate more offshore oil exploration and drilling, even with the BP (NYSE:BP) oil spill, with Cuba being the latest to enter the sector, saying exploration rigs will probably start drilling off their coast some time in 2011.

That would bring them very close to the coast of Florida, about 45 miles away.

Cuba is expected to drill even deeper than the Deepwater Horizon oil rig owned by Transocean (NYSE:RIG), which was leased to BP in the accident.

Chevron (NYSE:CVX) and Canada also revealed they had quietly been drilling off the coast of Newfoundland during the BP Gulf of Mexico crisis, finishing a well there about a month ago.

There are also too many projects to follow off of Africa and many other regions of the world.

The bottom line is offshore and deepwater drilling isn't going to go away, and will only increase.

America better respond accordingly and quit over-responding to a one-time event and free up the waters for more exploration and drilling, including many of the onshore areas as well.

Eventually that will happen, as demand will require it. It's only costing billions more to do it because of radical and controversial environmental groups who think they can stop the energy demands around the world. All they're doing is making it more expensive to do.

Oil companies should start to battle back and sue them into oblivion, charging them with criminal acts as Chevron recently did. They backed off quickly when facing fines.

There's absolutely nothing that will stop the increase of demand for oil, and nothing will stop offshore deepwater drilling.

Whether America or American-based companies benefit from it in the long run will be determined by them. The rest of the world will continue exploring for, drilling and discovering oil.

That isn't going to stop happening for decades, if not more, into the future.

Chevron (NYSE:CVX) Cleared for Drilling Off UK, First Since BP (NYSE:BP) Spill

Chevron (NYSE:CVX) was given the okay to start offshore drilling in deep waters off the coast of Britain; the first oil company to be given clearance since the BP (NYSE:BP) oil spill.

In a decision that raised a few eyebrows, Chevron will be bringing in Halliburton (NYSE:HAL), the company that did the cement work on the Deepwater Horizon oil rig leased by BP, which plummeted into the Gulf waters after the explosion.

BP has largely blamed Halliburton for the failure of the rig because of alleged faulty cement work.

Also being hired by Chevron is Cameron International (NYSE:CAM), who provided the failed blowout preventer for the Macondo well. They're providing the blowout preventer for Chevron's drilling.

Responding to some criticism, Britain's Department of Energy and Climate Change said this:

"All lessons learnt from [BP's Macondo well] have been applied to this well and steps have been taken to prevent the specific failures on Macondo. Close scrutiny of the well will continue, by the Health and Safety Executive, by DECC, and by Chevron itself."

Some see the approval for Chevron to go forward as the first step in increasing drilling off the Shetland islands.

BP is also negotiating with the British government over permission to drill in the area.

Judge Extends BP (NYSE:BP) Lawsuit Claims Until April 2011

A battle over time has been engaged in the hundreds of lawsuits filed against BP (NYSE:BP) and other companies related to the Gulf oil spill, and the judge has issued several decisions in response to it.

Judge Carl Barbier, the judge overseeing the cases, said as far as the time-frame to file lawsuits against the defendants, plaintiffs will be given until April 20, 2011. That's exactly a year since the explosion on the Deepwater Horizon oil rig which led to 11 deaths and oil spilling into the Gulf.

As far as the limitation of liability in connection to Transocean (NYSE:RIG), a trial date has been set for October 2011 do deal with that issue.

Lawyers for the plaintiffs have been pushing for things to go quicker, while BP and others have said they need more time to produce evidence. The judge in that area has sided with the defendants, saying they need a realistic amount of time to mount a defense.

Over the issue of whether or not plaintiffs should be required to go through the $20 billion compensation fund set up by BP to see if they qualify before being allowed to file a lawsuit, the judge hasn't made a ruling on that yet.

BP (NYSE:BP) to be Sued by Justice Department

In a court filing on Monday, the Justice Department said they will probably sue BP (NYSE:BP) for damages related to the Gulf of Mexico oil spill from the Deepwater Horizon.

The filing was with the U.S. District Court in New Orleans, Louisiana.

If they proceed, claims against BP would be based on the Clean Water Act and the Oil Pollution Act,

The Oil Pollution Act was put in place after the oil spill from the Exxon-Valdez (NYSE:XOM).

It wasn't clear if they're going to wait to see if BP will be tagged with a "gross negligence" label, which would significantly increase the potential penalties.

BP (NYSE:BP) Sued by Radical Environmental Group

Radical environmental group Food & Water Watch, filed a lawsuit against BP (NYSE:BP) over its Gulf of Mexico "Atlantis platform."

Wenonah Hauter, Food & Water Watch’s executive director in Washington, said, “We have evidence that Atlantis is unsafe and is in danger of creating an even worse spill than the one caused by the Deepwater Horizon explosion." Hauter didn't say what that evidence was.

The so-called activist group wants to force the shutdown of the Atlantis oil and gas production platform in the Gulf of Mexico until it shows it meets the required U.S. safety standards, according to the lawsuit.

Food & Water Watch cowered after an initial lawsuit was withdrawn because a judge ruled BP could intervene in the case. At that time BP requested its opponents be required to post a $15 billion bond to cover damages in case production on the Atlantis was stopped.

Investors Shrug Off BP (NYSE:BP) Report with Transocean (NYSE:RIG)

Transocean (NYSE:RIG) investors are largely ignoring the report by BP (NYSE:BP) which pointed to them as being responsible for some of the failure which led to the explosion on the Deepwater Horizon oil rig.

Shares are at their highest level in over a month, reaching $59.70, a gain of $4.40, or 7.96 percent, at 12:07 PM EDT.

A report from FBR Capital Markets is probably one of the reasons for the surge in share price of Transocean, as they said in the report they believe Transocean will settle with BP from $1 billion to $2 billion.

FBR added that's significantly below the $6 billion to $7 billion they think shares of Transocean have been discounted at because of their potential liability in the oil spill.

There are still some questions as to whether or not Transocean will be liable for anything because of the contract they had with BP which provides them with total indemnification.

Much still rides on whether or not BP is designated as having been grossly negligent in the incident.

BP (NYSE:BP) Report Puts Pressure on Halliburton (NYSE:HAL), Transocean (NYSE:RIG)

While there are other players in the game, including Cameron International (NYSE:CAM), who provided the blowout preventer which failed to function properly, the report released by BP (NYSE:BP) mostly targeted Halliburton (NYSE:HAL) and Transocean (NYSE:RIG) as being significant parts in the series of failures leading to the explosion on the Deepwater Horizon.

Cameron International isn't a real focus because the evidence there should be easy to determine and conclude as to what went wrong, making it a waste of time to pursue on the part of BP. Whatever happened, Cameron should be held mostly responsible and liable for it.

The major failures according to the BP report were the cement job by Halliburton, and the failure of Transocean to implement safety measures in response to the pressure buildup from the failed cement barrier.

Once the cement barrier failed, gases went up inside the well which ultimately led to the explosion on the oil rig.

Incoming BP CEO Bob Dudley said, "We have said from the beginning that the explosion on the Deepwater Horizon was a shared responsibility among many entities."

Other investigations will be performed to substantiate or refute the findings of the BP report.

Citigroup (NYSE:C) Responds to BP (NYSE:BP) Report

A flurry of responses, negative and positive, emerged in the aftermath of the release by BP (NYSE:BP) of their report stating the causes which led to the destruction of the Deepwater Horizon oil rig, and resultant release of oil and gas into the Gulf of Mexico.

Citigroup (NYSE:C) liked what BP had to say: “The report is not enough to give visibility on the eventual cost of this episode to BP but it demonstrates that BP is vigorously contesting that they were guilty of gross negligence, which would lower the range of cost outcomes.”

It seemed the market in general liked the report, and BP and other major oil companies rose after the contents of the report were released.

The report basically said a series of failures led to the accident, including systemic, mechanical and human failure.