Here’s Why Oil Stocks Are Up on October 1
Transocean (NYSE:RIG) is up about 4 percent in morning trading on October 1. The Brazilian Superior Court has partially lifted an injunction that ordered the company to suspend operation in the country for its roll in a spill at the Frade oil field.
The injunction originally called for Transocean to halt production at its nine operating rigs in Brazil, but the company will now be allowed to continue operations at all fields except Frade. While Transocean pursues a final legal resolution to the issue, it will not experience any interruptions in contract revenue.
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While on one hand Brazil wants to be paid damages for the spill, the state-led oil company Petrobras (NYSE:PBR) contracts with eight of Transocean’s rigs in the area, and could have lost billions if production was suspended.
Chevron (NYSE:CVX) suffered similar litigation related to the Frade oil spill, and Brazil is seeking almost $20 billion in damages from the company. Chevron was operating the Transocean-owned Frade rig under contract and both companies deny any wrongdoing.
Meanwhile, settlement talks between the United States and British Petroleum (NYSE:BP) have stalled. The U.S. government wants BP to pay between $18 and $25 billion for damages associated with the Deepwater Horizon spill in 2010, should the company be found guilty of “gross negligence” under the Clean Water Act. BP has consistently denied responsibility for the disaster, but it is thought that the company would settle for $15 billion.
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