Transocean Ltd. (RIG), the world’s largest offshore drilling company, was ordered by a Brazilian court to cease within 30 days operations in the country, where it supplies eight rigs to Petroleo Brasileiro SA (PETR4), Latin America’s largest oil producer by market value.
Transocean “is vigorously pursuing the overturn or suspension of the preliminary injunction, including through an appeal to the Superior Court of Justice,” Transocean said in a statement distributed by Marketwire. “Absent relief from the courts, Transocean will be required to comply.”
The order is part of a criminal investigation into an estimated 3,000-barrel leak in November at Chevron Corp.’s (CVX) Frade field. Transocean, which has a total of 10 rigs in Brazil, operated the rig at Frade. The rigs are crucial for meeting Petrobras’s production targets, Maria das Gracas Foster, chief executive officer of the Brazilian producer, said Sept. 20.
“If they shut them down it’s going to hurt Petrobras, that’s why Petrobras and the Brazilian oil regulator are doing everything in their power to help them with this court issue,” said Judson Bailey, head of oil services at International Strategy & Investment Group. “The clock is ticking. They’ll appeal and we’ll see what happens from there.”
State-controlled Petrobras, which produces more than 90 percent of Brazil’s oil, will support Transocean’s legal fight, Foster said. Transocean supplies about 10 percent of Petrobras’s offshore rig fleet, according to industry website Rigzone.
Chevron suspended operations in Brazil in March, before a court mandate to do so. Chevron was served the suspension order Sept. 25 and will “seek all legal means at our disposal” to overturn the injunction, Kurt Glaubitz, a spokesman for the San Ramon, California-based oil company, said by e-mail.
Brazil accounted for about 11 percent of Transocean’s revenue in the first half of 2012, according to the Marketwire statement.
Transocean slid 1.4 percent to $45.51 at 3:52 p.m. in New York, while Chevron gained 0.7 percent to $117.13. Petrobras rose 0.1 percent to 22.80 reais in Sao Paulo.
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