Transocean (RIG) Settles With DoJ Over Deepwater Horizon; Will Pay $1.4B

January 3, 2013 11:25 AM EST
(Updated - January 3, 2013 12:36 PM EST)

Shares of Transocean Ltd. (NYSE: RIG) surged mid-day on reports the company is set to announce a settlement in the Deepwater Horizon case.

Transocean is expected to pay fines and penalties of about $1.4 billion in a settlement with the Justice Department over the Deepwater Horizon accident, according to the Wall Street Journal.

Shares of Transocean last traded at $49.05, up 6%.

UPDATE - The full release is below:

Transocean Ltd. today announced that it has reached an agreement with the U.S. Department of Justice to resolve certain outstanding civil and potential criminal claims against the company arising from the April 20, 2010, accident involving the Deepwater Horizon in the Gulf of Mexico.

As part of this resolution, a Transocean subsidiary has agreed to plead guilty to one misdemeanor violation of the Clean Water Act (CWA) for negligent discharge of oil into the Gulf of Mexico and pay $1.4 billion in fines, recoveries and penalties, excluding interest. This resolution will result in the Department of Justice concluding its criminal investigation of Transocean and settling its claims for civil penalties against the company relating to the spill from BP’s Macondo well. The company intends to satisfy its payment obligations over a period of five years, using cash on hand and cash flow from operations. At September 30, 2012, Transocean had accrued an estimated loss contingency of $1.5 billion associated with claims made by the Department of Justice.

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.

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