Transocean, Ltd., the owner of the ill-fated Deepwater Horizon drilling rig, agreed Thursday to pay $1.4 billion in civil and criminal fines for its role in the 2010 Gulf oil spill, the largest offshore spill in US history.
The fines, which amount to less than a third of what BP paid in fines for the same disaster, may make it seem that the drilling contractor got the better deal. But the relative financial impact on the respective companies suggests otherwise.
The company also put the best face on the settlement.
"These important agreements, which the company believes to be in the best interest of its shareholders and employees, remove much of the uncertainty associated with the accident," Transocean said in a statement. "This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon. Their families continue to be in the thoughts and prayers of all of us at Transocean."
As part of the settlement, the company has admitted that its crew members – under BP's direction – were negligent in failing to investigate clear signs that the site well was not secure.
Although Transocean's fine is smaller than BP's, its impact on the company may prove to be larger.
This past November, the Justice Department fined British oil giant BP a record $4.5 billion for its role in the disaster, which killed 11 people and spewed millions of gallons of oil into the Gulf of Mexico. That figure doesn't include fines stemming from violations of the Clean Water Act, which could end up costing BP an additional $20 billion.
But Transocean is a much smaller company: about $12 billion in net assets at the end of 2011, compared with roughly $78 billion for BP. And there's less margin for error in Transocean's balance sheet than in BP's. The drilling contractor reported a loss of about $5.7 billion in 2011; BP reported a profit of $26 billion. In Q3 2012, Transocean lost $381 million while BP made $5.4 billion in profits.
BP has tried to shift some blame on Halliburton, suing the cementing contractor for what it says was a botched cement job on the failed rig. MOEX Offshore 2007 LLC, a 10 percent partner with BP in the Macondo well venture, has so far proven least culpable, at least in the Justice Department's eyes. Last year the company was fined $90 million for its violations of the Clean Water Act.
The settlement with Transocean represents the department's latest attempt to punish companies involved in the 2010 disaster and prevent future disasters.
“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,” US Attorney General Eric Holder said in a statement. “This agreement holds Transocean criminally accountable for its conduct and provides nearly a billion dollars in criminal and civil penalties for the benefit of the Gulf states."