Transocean Confirms Settlement with DoJ Related to Deepwater Horizon Claims

Transocean Ltd. (NYSE: RIG) today announced thatit has reached an agreement with the U.S. Department of Justice to resolvecertain outstanding civil and potential criminal claims against the companyarising from the April 20, 2010, accident involving the Deepwater Horizon inthe Gulf of Mexico.As part of this resolution, a Transocean subsidiary has agreed to plead guiltyto one misdemeanor violation of the Clean Water Act (CWA) for negligentdischarge of oil into the Gulf of Mexico and pay $1.4 billion in fines,recoveries and penalties, excluding interest.  This resolution will result inthe Department of Justice concluding its criminal investigation of Transoceanand settling its claims for civil penalties against the company relating tothe spill from BP's Macondo well.  The company intends to satisfy its paymentobligations over a period of five years, using cash on hand and cash flow fromoperations.  At September 30, 2012, Transocean had accrued an estimated losscontingency of $1.5 billion associated with claims made by the Department ofJustice.These important agreements, which the company believes to be in the bestinterest of its shareholders and employees, remove much of the uncertaintyassociated with the accident.  This is a positive step forward, but it is alsoa time to reflect on the 11 men who lost their lives aboard the DeepwaterHorizon.  Their families continue to be in the thoughts and prayers of all ofus at Transocean.Terms of the AgreementA Transocean subsidiary has agreed to plead guilty to a single misdemeanorviolation of the CWA for negligent discharge of oil into the Gulf of Mexico. This violation pertains to well monitoring in connection with specificoperations during the temporary abandonment procedure on April 20, 2010. Pursuant to the agreement, Transocean will pay a fine in the amount of $100million within 60 days of this agreement receiving U.S. federal courtapproval.  The Transocean subsidiary will also be subject to astatutory-maximum term of five years of probation. Additionally, Transocean will pay $150 million to the National Academy ofSciences (NAS) over a five-year period, and $150 million to the National Fishand Wildlife Foundation (NFWF) over a three-year period.  The funds paid tothe NAS will be for the purposes of oil spill prevention and response in theGulf of Mexico; funds paid to the NFWF will be directed to natural resourcerestoration projects and coastal habitat restoration, including restoration ofthe barrier islands off the coast of Louisiana and diversion projects on theMississippi and Atchafalaya Rivers.To address the government's pending civil claims, Transocean has agreed to pay$1 billion in CWA civil penalties over a period of three years.  Additionally,the company has agreed to implement certain measures to prevent a recurrenceof an uncontrolled discharge of hydrocarbons.  Transocean has agreed toconsult with the United States in preparing a performance plan for theseimprovement measures, which must be submitted for the government's approvalwithin 120 days of this agreement taking effect.Any potential claims associated with the Natural Resources Damage Assessment(NRDA) process are excluded from the agreement with the Department of Justice.However, the district court previously held that Transocean is not liableunder the Oil Pollution Act for damages caused by subsurface discharge fromthe Macondo well.  Assuming that this ruling is upheld on appeal, Transocean'sNRDA liability would be limited to any such damages arising from theabove-surface discharge. The Department of Justice has agreed that it will not pursue furtherprosecution of Transocean Ltd. and certain of its subsidiaries for any conductregarding any matters under investigation by the Deepwater Horizon Task Forcerelating to or arising out of the Macondo well blowout, explosion, spill orresponse.  Transocean has agreed to continue to operate with the DeepwaterHorizon Task Force in any ongoing investigation related to or arising from theaccident.  The civil and criminal agreements are subject to court approvaland, in the case of the civil agreement, public notice and comment.Timing of PaymentsPursuant to the agreements, Transocean will pay fines, penalties andrecoveries totaling $1.4 billion over a five-year period according to thefollowing schedule: o 2013 - payments totaling $560 million o 2014 - payments totaling $460 million o 2015 - payments totaling $260 million o 2016 - payments totaling $60 million o 2017 - payments totaling $60 millionIn addition, civil penalties will bear interest from the date that the consentdecree is lodged with the court.  Neither settlement payments nor accruedinterest are deductible for tax purposes.