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Transocean ordered to stop drilling in Brazil

BY STEVE GELSI

NEW YORK -- Transocean lost ground for the second straight session Friday, joining a general decline by energy stocks, after the offshore rig owner was ordered to halt drilling in Brazilian waters.

Despite the sector' s move downward on the last trading day of the month, energy stocks finished out September in positive territory.

Transocean Ltd. dipped 1%, moving a bit more deeply into the red than other oil service firms, after it said it was notified to halt operations on its nine rigs in Brazil within 30 days as litigation continues over the Frade field oil spill. A Transocean rig was drilling in the field for Chevron Corp. when the 3,600-bbl spill occurred in November 2011.

Chevron has appealed an injunction by Brazilian authorities and is fighting $20 billion in proposed damages and criminal charges against 17 Chevron and Transocean employees.

Chevron spokesman Lloyd Avram said the company "will seek all legal means at our disposal to overturn the injunction and demonstrate the company acted diligently and appropriately at all times."

Analysts at Tudor Pickering Holt said Transocean' s Brazilian business accounts for about 11% of its revenue.

"(The) ruling has been appealed and ultimately we think this smoke clears," said analysts, who pointed out that Brazil' s leading petroleum regulator and its state-run oil company, Petrobras (PBR), have backed Transocean.

Separately, Transocean said it won 10-year contracts with Royal Dutch Shell for four new drill ships.

In the broader energy sector, the NYSE Arca Oil Index fell 0.7% at the closing bell, but it' s up 1.8% in September. It' s also in positive territory by 2.4% for the year.

The NYSE Arca Natural Gas Index dipped 0.2% on Friday. It' s up 4.5% for the month and 5.3% this year.

The Philadelphia Oil Service Index dropped 0.9% on Friday. It' s down about 0.7% in September and up 3.6% this year.

The Energy Select Sector SPDR Fund, which tracks energy stocks in the S&P 500, fell 0.5% on Friday, but it' s holding on to a rise of 1.9% for the month and 6.2% this year.

Exxon Mobil Corp. fell 0.4% and Chevron lost 0.6%. They are components of the Dow Jones Industrial Average, which dropped 49 points.

Among stocks on the move, power generators Duke Energy rose 1.1% and PPL Corp. moved up by 1.4%.

On the down side, Alpha Natural Resources dropped 2.7% and First Solar Inc. fell 4.2%.


Dow Jones Newswires

09/28/2012

 

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