No. of Recommendations: 2
http://www.reuters.com/article/idUSTRE6BE59J20101216?feedTyp...

So Transocean, which this port owns, is down significantly on last night's news that the US government had filed a civil lawsuit against BP, Anadarko, MOEX, and Transocean (though not Halliburton, the ones who cemented the well before it blew out). Went from a +12.43% and +1.6% as of last night's close to +7.46% and -2.9%, respectively.

It is this lawsuit, and others like it likely, that will determine exactly how strong those indemnify clauses are in the contracts between Transocean and the oil companies. If they're found wanting, that is Transocean is responsible for some of the oil spill, that's going to have a huge rippling impact upon the oil industry and every single other business-to-business contract.

There's a bunch of other legal issues, too. One I can think of is can the government retroactively change the laws under which companies operate to punish them for an event that wasn't a crime at the time it happened? Raising the $75 million per gallon spilled cap, for instance.

The drop in price is reaction to a new threat to future cash flows. The extent of the drop, about 4.5% right now, isn't that big, really. Lawsuits were coming, and this seems to be a response to that shoe dropping with one of the biggest potential ones now filed.

I expect this to take several years to play out and not even show up on the financial statements until near the end.

Investing thesis hasn't changed, but headline risk has bumped up again after the company had gotten down to a small handful per day until just recently. Today, there are 20 different headlines on stories covering this from several angles. Will take a bit for that to die down again.

Cheers,
Jim
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No. of Recommendations: 2
have quite a lot of RIG myself. Was expecting it to stay range bound on these overhanging concerns for a year to 18 months. With that in mind I believed they would be a good covered straddle

Was not thrilled to see it run to $72 unexpectedly. Selfishly glad to see it come back a little. Love this company and believe it is the best of the deep sea operators
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