Transocean will fight for its fair share of proceeds from insurance policies providing for at least $750 million in coverage, after an appeals court ruling allowed BP to tap into the money to help pay for its liabilities related to the 2010 Gulf of Mexico oil spill.
“We are disappointed in the decision and our counsel will be considering our options going forward,” CEO Steve Newman said during a conference call with analysts and investors on Monday.
Newman said that even if the ruling stands, the Swiss drilling contractor plans to seek the reimbursement it is entitled to.
In a ruling entered late Friday, the 5th U.S. Circuit Court of Appeals reversed a decision by U.S. District Judge Carl Barbier, the presiding judge in the ongoing civil trial over the disaster that is being held in New Orleans, and said that BP can tap into insurance policies held by rig owner Transocean.
BP had sought access to the money to help cover its pollution-related liabilities deriving from the worst offshore oil spill in U.S. history. It asserted that it should be considered an additional insured party on Transocean’s policies because of their contract involving the Deepwater Horizon rig and Macondo well project. Barbier denied the request, and BP appealed to the 5th Circuit.
At the trial, BP faces the potential of having to pay billions of dollars more in damages and fines related to the April 20, 2010 disaster off Louisiana. BP owned the well that blew out and was leasing the Transocean rig that exploded, killing 11 workers. Transocean also faces the potential for damages.
Testimony in the trial resumed Monday.
“We are well prepared to argue our case on strong and compelling merits,” Newman said of the trial.
As for its financial health, Transocean announced on Sunday that its board recommended that the company’s shareholders approve a dividend of $2.24 per share, or roughly $800 million in total. The board expects that the proposed dividend will be payable in four quarterly installments, set for June, September and December of this year and March of next year.
On Friday, Transocean reported that it swung to a fourth-quarter profit of $456 million, or $1.26 a share, compared to a year earlier loss of $6.17 billion, or $18.76 a share. Revenue in the quarter rose to $2.33 billion from $2.13 billion a year earlier.
The net unfavorable items in 2011 were primarily due to a loss on goodwill impairment of $5.2 billion related to Transocean’s contract drilling services reporting unit, and$1 billion for estimated loss contingencies associated with the Gulf oil spill incident.
Read ongoing FuelFix coverage of the legal trials surrounding the Gulf of Mexico oil spill:
Transocean, Halliburton say their Gulf spill tabs should be BP’s burden (March 1)
Feds charge 15 with scamming BP oil spill fund (March 1)
Judge approves $1B civil settlement for Transocean (Feb. 19)
BP’s potential oil spill liability cut by $3.4 billion (Feb. 19)
Guilty: Transocean convicted in Gulf of Mexico oil spill (Feb. 14)
BP loses some federal contracts due to spill (Feb. 5)
Guilty: BP admits to causing deaths in spill disaster (Jan. 29)
Rig victim’s widow says Gulf disaster caused ‘inferno of grief’ (Jan. 11)
Transocean to pay government $1.4B to settle fed’s spill claims (Jan. 3)
Government accuses BP of being evasive on Gulf spill flow rate (Dec. 28)