Brazilian Federal Court Tells Transocean it has 30 Days to Cease Operations

Transocean was on a drilling contract with Chevron for the Frade field offshore Brazil back in November 2011 when fissures in the sea floor above the field began to seep oil. Image: Frade FPSO, Chevron

Transocean Ltd. (NYSE: RIG) (SIX: RIGN) announced today that at approximately noon Rio De Janeiro time (11 a.m., ET), the federal court in Rio de Janeiro served the company with a preliminary injunction requiring that it cease operations in Brazil within 30 calendar days from the date of service.

In a company statement, Transocean comments that they are “vigorously pursuing the overturn or suspension of the preliminary injunction” via an appeal to Brazil’s Superior Court of Justice.

If this fails to go through however, Transocean’s 10 rigs which are currently on contract for work in Brazil (nine of which are in country) will be required to comply with the preliminary injunction. They are currently evaluating rig contracts and collaborating with their customers such as BP, Chevron, and Petrobras to determine appropriate actions with respect to operations.

For the six months ended June 30, 2012, the company’s operations in Brazil accounted for approximately 11 percent of consolidated operating revenues.

While Chevron was sanctioned by Brazilian oil regulators, Transocean was cleared by the country’s National Petroleum Agency, or ANP.

The ANP has also appealed the case, citing the economic impact the suspension would have on oil companies operating in Brazil as well as its role as the industry’s lead regulator.

The following video shows the oil seeping from the sea floor in Campos Basin offshore Brazil at a depth of 3,700 feet starting on November 7, 2011.