Transocean (RIG) Civil, Criminal Settlement in Macondo Case Removes Large Overhang

February 11, 2013 3:41 PM EST
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The worst might be over for Transocean (NYSE: RIG), FBR Capital said today. At least, as it relates to the 2010 Macondo well incident in the Guld of Mexico.

FBR says a federal judge is likely to accept Transocean's guilty plea for misdemeanor violations related to the event. Transocean is likely to pay the $400 million criminal settlement for violations of the Clean Water Act (CWA) reached in January, as well as another $1 billion in a civil settlement. The firm believes approval is already priced into the stock with only a small chance that the verdict would be overturned on appeal.

On the civil settlement, which was reached last Friday, FBR said: This settlement was subject to a 21 day comment period which ended on January 30; the Ocean Conservancy, Gulf Restoration Network and BP all filed comments and per BP's comments, the DOJ agreed to adjust the language of the settlement to prohibit Transocean from trying to collect payment from BP subsidiaries to pay fines.

There will still be state and local government claims, not to mention any litigation brought about by individuals. Transocean is indemnified against claims of economic loss in accordance with its BP plc (NYSE: BP) contract, though that might be subject to appeal.

Shares are down about one percent Monday afternoon. FBR rates Transocean at Outperform with a $68 price target.

For an analyst ratings summary and ratings history on Transocean click here. For more ratings news on Transocean click here.

Shares of Transocean closed at $56.38 yesterday.

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