• On 21 May 2013, Moody’s announced rating actions on MBIA Insurance Corp., National Public Finance Guarantee Corp., MBIA Inc. and other related entities. Because of the large number of credits across several asset classes affected by these rating actions, including Moody's-rated securities that are guaranteed or "wrapped" by these companies, ratings appearing on this website may not yet reflect current information. For current information on affected credits, please visit www.moodys.com/fig.
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Announcement:

Moody's: Gulf of Mexico Court Rulings Limit BP's Indemnity for Transocean and Halliburton

Global Credit Research - 13 Feb 2012

New York, February 13, 2012 -- Recent court rulings that BP plc must indemnify Transocean and Halliburton for compensatory damages stemming from the devastating 2010 Macondo oil spill in the Gulf of Mexico—but offering no protection from any civil fines and penalties under the Clean Water Act and punitive damages that arise—appear credit-negative for Transocean, but slightly credit-positive for Halliburton, Moody's Investors Service says in a new special comment.

Transocean's Deepwater Horizon oil rig, working on BP's Macondo Prospect in the Gulf of Mexico, exploded in April 2010, killing 11 workers and setting off a leak that spilled an estimated 4.1 million barrels of oil into the Gulf according to a report commissioned by the US Department of the Interior. Halliburton had provided the rig with data acquisition and well-cementing services—part of the process designed to control high-pressure well conditions and prevent leaks.

"In our view, the recent rulings greatly reduced the potential for Transocean and Halliburton to share in the cost of third-party compensatory claims," says Stuart Miller, a Moody's Vice President -- Senior Analyst and author of the report. "From a credit standpoint, this has a greater positive impact on Halliburton than on Transocean as we believe compensatory claims represented a larger proportion of Halliburton's potential exposure."

Halliburton remains at risk to some level of civil fines and penalties and possibly punitive damages, but to a lesser degree than Transocean as the owner and operator of the Deepwater Horizon. The report notes that the US Department of Justice (DOJ) has not named Halliburton as a Responsible Party in its proceedings. The new rulings apparently leave the two companies exposed to possible punitive damages if the court agrees with DOJ's assertion that the companies acted with gross negligence that led to the Macondo accident.

"Ultimately, the court will rule on the financial responsibility for what could be more than $40 billion in liabilities that resulted from the Macondo incident," added Miller. "Barring out-of-court settlements, these recent district court rulings mark just the beginning of a long court battle unlikely to be completed before 2013, and after appeals may take years to fully resolve. But for now, the rulings hint at modestly reduced financial risk for Halliburton and slightly higher financial risk for Transocean."

For more information please see the full report, "Initial Macondo Summary Judgments Offer Split Decision," on www.moodys.com.

***

NOTE TO JOURNALISTS ONLY: For more information, please call one of our global press information hotlines: New York +1-212-553-0376, London +44-20-7772-5456, Tokyo +813-5408-4110, Hong Kong +852-3758-1350, Sydney +61-2-9270-8141, Mexico City 001-888-779-5833, São Paulo 0800-891-2518, or Buenos Aires 0800-666-3506. You can also email us at mediarelations@moodys.com or visit our web site at www.moodys.com.

Stuart Miller
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
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U.S.A.
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Steven Wood
MD - Corporate Finance
Corporate Finance Group
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Releasing Office:
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SUBSCRIBERS: 212-553-1653

Moody's: Gulf of Mexico Court Rulings Limit BP's Indemnity for Transocean and Halliburton
No Related Data.

 

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