On Tuesday and Thursday of last week, Brazil's government decided to crack its whip in their ruling on Chevron and Transocean's involvement in last November's Frade field oil spill. Both companies have been dealt an injuction that gives them 30 days to cease operations off the up-and-coming oil producer's coast. Petrobras and ANP, Brazil's national petroleum agency, are both fighting to keep the companies in operation because of their perceived importance in the country's future oil production, but the Supreme Court struck down ANP's first attempt last week.
Transocean appears to be the most affected based on the revenues it generates in Brazil as a percentage of total revenue. It currently has 10 rigs in operation, eight of which are contracted to Petrobras. Its recently announced deal with Royal Dutch Shell (RDSA)involving four drilling contracts is worth an estimated $7.6 billion and is set to commence in 2015 and 2016.
If the injuction stands the test of Chevron and Transocean's efforts, other offshore drillers such as Ensco (VAL)and Seadrill (SDRL)stand to benefit from the removal of Transocean's deepwater rigs. See more in the following video.
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