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Subject:  Re: Fortune on RIG Date:  12/20/2010  10:46 AM
Author:  TMFGebinr Number:  109 of 1287

Hi Dave,

Nice find! Thanks for posting the link.

That's a pretty broad indemnification clause quoted in the analysis. It will probably end up in court as BP will almost surely try to break it (or bend it a little) to push some of the monetary (and criminal??) penalties off onto its partners. Already, as noted before, Transocean has been named a defendant to the government's civil lawsuit. That indemnity clause is going to play a big role there.

But courts have to be careful about upsetting that clause, as they appear in pretty much every contract between two companies doing business together. Even the tiny, tiny company I used to work for had such clauses in its contracts.

And if the courts do rule that this part of Transocean's contracts have to change, you can just bet that dayrates will be raised to compensate for the increased risk such changes would impose.

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