(The Canadian Press) The U.S. Justice Department has reached a $1.4 billion settlement with Transocean Ltd. (NYSE: RIG, Stock Forum), the owner of the drilling rig that sank after an explosion killed 11 workers and spawned the massive 2010 oil spill in the Gulf of Mexico.
Two people with knowledge of the negotiations say Switzerland-based Transocean would pay the money to resolve the department's civil and criminal probe of the company's role in the Deepwater Horizon disaster.
The people spoke on condition of anonymity because the settlement hadn't been announced publicly, though that announcement was expected later Thursday.
One of the people, a law enforcement official familiar with the deal, said Transocean would pay $1 billion in civil penalties, $400 million in criminal penalties and would plead guilty to violating the Clean Water Act.
Transocean shares were up more 7.2% to $49.57 Thursday, following the news.
BP PLC (NYSE: BP, Stock Forum), which leased the rig from Transocean, already has agreed to pay a record $4.5 billion in penalties and plead guilty to manslaughter and other criminal charges related to the spill. The deal with BP doesn't resolve the federal government's civil claims against the London-based oil company.
In September, Transocean said in a regulatory filing that it had discussed a $1.5 billion settlement with the Justice Department that had to clear several hurdles before it could be completed. The company said one sticking point was whether a settlement would include claims for environmental damage under the Oil Pollution Act of 1990.
Transocean previously announced it had reserved $2 billion for paying claims related to the Deepwater Horizon disaster. Transocean also said in the September filing that it had rejected settlement offers last year from BP and a group of attorneys for Gulf Coast residents and businesses who blame the spill for economic damages. Those claims are still pending.
Last month, a federal judge in New Orleans gave final approval to a class-action settlement agreement between BP and a team of private plaintiffs' attorneys. BP estimates it will pay about $7.8 billion to resolve these claims, but the settlement isn't capped.
The financial impact is very different for the two companies.
BP reported profits of more than $25 billion in 2011, but for Transocean the year resulted in a loss of about $5.7 billion, some of it attributed to contingencies for litigation resulting from the sinking of the Deepwater Horizon.
A series of government investigations have spread out the blame for the nation's worst offshore oil spill among BP, Transocean and other partners on the project, including cementing contractor Halliburton.
The Deepwater Horizon was drilling in water a mile deep about 80 kilometers southeast of the Louisiana coast when it exploded on the night of April 20, 2010.
The rig burned for about 36 hours before sinking.
As engineers made repeated attempts to halt the flow of oil from BP's busted Macondo well, millions of gallons of crude flowed out. Marshes, beaches and fishing grounds across the northern Gulf were fouled by the oil.