A Dubious Strategy By Transocean

Todd Shriber
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Wednesday will not go down as a day of great news flow for Transocean, the owner of the Deepwater Horizon rig. Not only was the sort-of-Swiss company slapped with a $1.8 billion tax evasion law suit in Norway, Transocean was grandstanding and pointing the finger at BP, the Deepwater Horizon's operator, for the Gulf oil spill.

Transocean, the world's largest provider of offshore drilling services, released its own internal investigation regarding the tragedy that resulted in 11 deaths and the largest oil spill in U.S. history and the report, not surprisingly, included some harsh words about BP. I will not rehash the whole thing, but you can view the finer points (HERE).

To this point, of all the companies involved in the Gulf oil spill, Transocean (RIG) has been the most reticent to own up to what could prove to be a very hefty financial liability if the company is on the receiving end of an unfavorable court ruling. Last month, Moex, the Japanese firm that held only a 10% non-operating interest in the Macondo Well project, settled claims with BP for $1 billion. Earlier this week, oil services firm Weatherford International (WFT) agreed to fork over $75 million to the British oil giant, despite not being one of the primary villains in this scenario.

Even Andarko Petroleum (APC), which held a 25% non-operating interest in Macondo and had previously been strident in its opposition to giving BP a dime, has recently said it would come to the table with BP if the circumstances were right.

All of this kind of leaves some egg on the face of Transocean. After all, the company has been quite diligent about finding ways out of a potential multi-billion dollar spill liability. Whether it be attempting to use obscure maritime laws or other bits of legal wrangling, the company has engaged itself in an almost impossible-to-win public relations imbroglio.

Obviously, BP (BP) has a long way to go before anyone along the Gulf Coast has warm and fuzzy feelings about the company again. There is a chance it may never happen and while I will not sit here and proclaim myself president of the BP fan club, the bottom line is the company has at least attempted to make amends in its own way. The same cannot be said of Transocean, at least not yet.

Finger-pointing is rarely, if ever, productive in any facet of life and Transocean should realize that perhaps the sooner the spill issue, all of it, is put to bed, then maybe some of more its rigs will be at work again in the Gulf. That would be nice for the shareholders, would it not?

For now, fans of the financial markets and the U.S. legal system may have to be content to watch Transocean and BP engage each other in court. Having covered some far smaller corporate legal contests in my day, I can say they are not always interesting, but something tells me a BP/Transocean legal tussle will be worth the price of admission.