sell RIG & Buy BP NOW...
Cramer: Gulf Oil Spill Is a ‘Transocean Problem’
Published: Thursday, 29 Apr 2010 | 3:21 PM ET Text Size By: Tom Brennan
Web Editor, Mad Money
BP isn’t the only party to blame for a leaking oil well in the Gulf of Mexico, Cramer said during Thursday’s Stop Trading!. The company who built the deepwater rig is responsible, too.
That company is Transocean [RIG 78.08 -6.75 (-7.96%) ], from whom BP [BP 52.29 -5.05 (-8.81%) ] leased the rig that exploded on April 20 and is causing 5,000 barrels of oil a day now to pour into the Gulf. According to the US Coast Guard, that oil could reach shore by Friday, and Cramer thinks BP’s share price could drop again when that happens.
But while BP “is doing everything it can do” to admit to its mistake, including a mea culpa on NBC’s Today show, Cramer called this a “Transocean problem” as well. Transocean built the rig in question and therefore bears some of the blame for what has happened.
“Transocean is the one that I think is more responsible here,” Cramer said.
Regardless, Cramer expects to see more of the “emotional trading” in BP that has driven the stock lower since the Gulf accident.
Not only are their questions about Halliburton's cementing job, it appears that the blowout preventer didn't work. How is Transocean culpable for either of these problems? Cramer and CNBC are deep pockets. Maybe RIG should sue them for libel.
<<[BP Exploration and Production chief operating officer] Suttles also said Deepwater Horizon crew members reported that they manually tried to activate the blowout preventer before they left the semi. In addition, response crews have tried to activate the BOP from subsea access points....
Meanwhile the US Minerals Management Service said its inspectors plan to review BOP inspection records for all deepwater drilling rigs in the gulf during the next 7 days to ensure that all the proper testing has been done on the BOPs....
BP continues working on the BOP on the well, using remotely-operated vehicles.>>
I am an attorney and we'll try and other some legal perspective. Obviously there will be an apportioning of liability (legally called an indemnity) by BP against transocean, and transocean will then enjoin other parties like cameron, halliburton who may have made parts that malfunctioned. The question will be whether or not transocean was negligent in there operation of the rig - if an investigation or a court of law find that transocean did not meet the proper standard of care they may have to share with other companies in the cleanup cost (Interesting here to see if they have a binding arbitration clause or if the case goes to court- also if transocean have BP a long-term relationship that might affect costs). Ultimately this will probably never go to court because all parties would be afraid of the public embarrasment of having the details of the incident rehashed in the public eye (Not to mention litigation costs). My guess is that since BP has a 65% interest(Andarko and Mitsui ahve other interest but I"m not sure what their respective interests are) in the rig and self-insure some of that insurance money will used be given to BP as an indemnity for clean-up. The big question is how much and that will determine on the extent of the negligence that transocean and other company's employees may or may not have engaged in. I think its obviously a big positive that transocean has insurance while BP does not, but its ridiculous to not think some of that insurance money will be apportioned for the clean-up costs currently being absorbed by BP entirely.
straight from Rig's website:Transocean owns or operates a modern, diversified fleet of 138 mobile offshore drilling rigs, including 70 floaters -- drillships and semisubmersible ris -- and 65 jackup rigs. Our floater fleet includes 18 drillships and 52 semisubmersible rigs, and we are constructing another five newbuild ultra-deepwater drillships.
So, when did Cramer become an expert in drilling and engineering to know who would shoulder more of the responsiblity on this disaster? Is he a marine engineer or maybe just an engineer? Are all the facts out yet on what really happened? He is not in the position to know culpability? He is a trader/hedge fund guy, what does he know of how to build things? Unfortunately, these kinds of non-experts or paper pushers or numbers guys have alot of power and can distrub stock prices or make political trouble, eventhough, they No Nothing, as Cramer would say. He should just say, OH BOY, this will hurt the stock, and that's it.