A federal judge on Thursday said BP Plc Transocean Ltd. to compensate for a number of compensatory claims over the 2010 Gulf of Mexico oil spill. U.S. District Judge Carl Barbier, who oversees Multistate disputes over the spill, agreed with the Transocean drilling Swiss master was not responsible for compensation claims by third parties for oil spill below the ocean surface. He ruled, however, that the London-based BP does not indemnify Transocean punitive damages or civil penalties imposed by the U.S. government under the federal Clean Water Act.
Thursday’s decision limits the potential liability Transocean faces on April 20, 2010 Deepwater Horizon oil rig explosion that killed 11 and the largest offshore oil spill in U.S. history caused.
Transocean owns the rig, while BP had a majority of the Macondo well blowout that caused the leak.
Shares of Transocean rose 8.9 percent in after-hours trading, and BP shares fell 0.6 percent.
“Indemnification of damages is the key to Transocean,” whose litigation exposure is now “substantially reduced” Angie Sedita UBS Securities LLC analyst wrote in a research note. She has a “buy” rating on Transocean.
Sedita said that BP has a Clean Water Act liability estimated at $ 3.5 billion, but other estimates are as high as $ 6 billion. She also said Transocean has $ 950 million of insurance for bodily injury and third party claims.
Barbier oversees hundreds of cases related to the spill, including a $ 40 billion lawsuit against BP Transocean last April.
Both companies welcomed parts of the decision of the court.
“This confirms that BP is responsible for all economic damages caused by the oil that leaked from the Macondo well, and ongoing attempts to discredit BPs to both the contractual and financial obligations to withdraw,” Transocean spokesman Lou Colasuonno said in an e-mail.
BP spokesman Daren Beaudo said in an e-mail statement that the decision “Transocean financially responsible for any damages, fines and penalties resulting from its own conduct himself. As we have said from the beginning, Transocean can not its responsibility for these to prevent accidents. ”
Transocean had argued that its contract drilling BP obliged to defend against claims on the ground contamination, even though Transocean has found gross negligence or “strict liability.”
BP countered that the responsibility to indemnify Transocean does not extend that far.
Barbier not decide whether Transocean will be liable for punitive damages or civil penalties, or rule on the claim that BP Transocean drilling contract breach.
The New Orleans-based court has a February 27 start date for a trial to apportion blame.
Transocean shares rose $ 4.19 to $ 51.45 in after-hours trading in New York, after closing regular trading down 10 cents at $ 47.26.
BP American Depositary receipts fell 27 cents to $ 44.50 after hours, after dropping 13 cents to $ 44.77 during the day.
source:reuters
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