September 28, 2012
A Brazilian court has given oil giant Chevron (NYSE: CVX ) and Transocean (NYSE: RIG ) , the world's largest offshore driller, 30 days to halt operations in the country.
Following last November's 3,700-barrel oil leak at Chevron's Frade field off the coast of Brazil, a Brazilian court recently served an injunction on the companies, giving them 30 days to suspend all operations in the nation until ongoing court cases are resolved, according to published reports. Transocean said in a statement that it is "vigorously pursuing the overturn or suspension of the preliminary injunction, including through an appeal to the Superior Court of Justice."
Chevron additionally said this week that it paid a $17.3 million fine over the Frade incident; a 30% discount is expected to apply as Chevron did not contest the fine and paid on time.
Both Chevron and Transocean face civil lawsuits seeking billions in damages, even though no oil from the Transocean-operated Frade reached Brazilian shores. Criminal charges are also pending.
Transocean could be hit hardest by the injunction, if it is not lifted. In the first half of 2012, 11% of the company's consolidated operating revenues came from Brazil, where it has 10 rigs under contract. Eight of those rigs work for state-run Petrobras. Petrobras partners with Chevron at the Frade field and has supported both companies through this process. Chevron halted Frade operations in March.
Shares of both Chevron and Transocean fell on Friday in midday trading, with the former's stock down half a percent and shares of the latter falling 1%.
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