WASHINGTON - Transocean Ltd has agreed to pay $1.4 billion to settle U.S. government charges arising from BP Plc's massive 2010 Deepwater Horizon oil spill in the Gulf of Mexico.
The settlement unveiled by the Department of Justice includes $1 billion in civil penalties and $400 million in criminal penalties. The company had set aside a total of $1.95 billion in potential losses related to the spill, including $1.5 billion for its anticipated settlement with the DoJ.
Shares of Transocean were up 7 percent at $49.50 on midday trading on the New York Stock Exchange. The Standard & Poor's 500 Index was up 0.1 percent.
"The bottom line to me is they now can put away the big black cloud that has been hanging over them," said Phil Weiss, an oil analyst at Argus. "I take this as a positive, even if the number is a little higher than I expected."
Switzerland-based Transocean owned the Deepwater Horizon rig that was drilling a mile-deep well when a surge of methane gas sparked an explosion on April 20, 2010. The explosion killed 11 men and led to one of the largest environmental disasters in U.S. history.
"This resolution of criminal allegations and civil claims against Transocean brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster," U.S. Attorney General Eric Holder said in a statement.
BP to pay $4.5 billion, plead guilty to manslaughter in Gulf of Mexico oil spill
BP and Transocean had "multiple safety management system deficiencies that contributed to the Macondo incident," and neither had adequate safety rules, according to a July 2012 report from the U.S. Chemical Safety Board.
Transocean and BP disagreed on who was in charge of interpreting what is known as a negative pressure test, which could have alerted workers to the well's instability.
BP in November agreed to a settlement with the U.S. government worth $4.5 billion, including the largest criminal fine ever at $1.256 billion. The London-based oil company also agreed to plead guilty to obstruction of Congress, a felony.
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