Five days after appearing before Congress to testify about its responsibility in one of the worst oil spills in US history, the Swiss company that owned and operated the oil rig that sunk into the Gulf of Mexico announced that it would shell out $1 billion in dividends to shareholders.
The revelation that Transocean is distributing a $1 billion profit to shareholders as one of its drill sites leaks millions of gallons of oil into the sea is sure to inflame an already smarting debate over offshore drilling and the company’s role.
Transocean has passionately argued that they don’t share financial responsibility for the disaster. A clause in a contract they had with BP says that the oil company is obligated to pay for any environmental damage, even though Transocean actually owned the rig. BP was leasing the rig from Transocean at the time of the accident.
Transocean’s distribution to shareholders was done quietly on Friday at a “closed door meeting.” The company had previously announced that they would vote on the dividend at the event.
To put the distribution in perspective, the amount of profit that Transocean plans to pay out in the next year is half of what Exxon ultimately paid for the Exxon Valdez disaster off the Alaska Coast.
It’s also more than double what BP has said they’ve spent on the cleanup to date.
The company also made a paper gain from their insurance carrier after the Deepwater Horizon rig collapsed into the ocean aflame.
Transocean had insured the rig for $560 million, but apparently never spent that much money actually building it. The company’s CEO told investors on a recent conference call that the firm had book a $270 million “accounting gain” on the difference between the real value of the rig and the amount that they’d insured it for.
Since the rig collapsed, the company said they’ve already received $401 million from their insurance policy.
The Associated Press also notes that “Transocean moved to Switzerland two years ago to protect its low corporate tax rate, and few in the city had heard of the company, even three weeks after the April 20 blast that resulted in more than 4 million gallons (15 million liters) of oil pouring into the Gulf of Mexico from the well drilled by the BP-leased rig. Eleven workers were killed in the explosion.”
“Steven Newman ignored questions from reporters as he arrived and left the Park Hotel in the Swiss town of Zug, a few miles from the company’s headquarters,” AP added.
In a brief press release on their website, the firm noted the terms of the dividend, expected to be paid out to shareholders in four increments over the next year.
“Shareholders also authorized the Board of Directors to make a cash distribution to shareholders in the form of a par value reduction in the aggregate amount of 3.44 Swiss francs (“CHF”) equal to approximately USD 3.11 per issued share to be calculated and paid in four quarterly installments,” the release said. “Based on the total number of issued shares, including treasury shares, the distribution is approximately USD 1.0 billion.”
It adds, “The Board of Directors expects to set the respective payment dates of the four installments in July 2010, October 2010, January 2011 and April 2011, or as soon after each of the four periods as is practicable. The actual installment payments will be subject to the satisfaction of applicable Swiss law requirements.”