Transocean Surges Despite BP Report

NEW YORK (TheStreet) -- Transocean(RIG) shares are seeing heavy volume on Friday morning and a rise of more than 7%. Transocean reached its highest share price in more than a month.

There were a few items of news on Friday related to the rig operator at the center of Gulf of Mexico oil spill, which is exposed to the unquantifiable liabilities.

The AP reported that Transocean asked a Swiss court to overturn an August decision that blocked its plan to pay shareholders the first of four dividend installments totaling $1 billion. A decision was expected within weeks. Some shareholders had long asked Transocean to begin paying dividends, a concession that the rig operator finally made this year, only to see the oil spill ironically put a halt on those plans.

FBR Capital Markets was out with a report on Transocean in the wake of this week's BP report on the oil spill. FBR estimates that Transocean will reach a settlement with BP to pay between $1 billion and $2 billion, far less than the $6 billion to $7 billion that FBR believes Transocean shares have been discounted by based on oil spill liability risk.

The BP report jointly blamed Transocean and BP workers for failing to properly analyze a pressure test on the rig, though much of the blame assigned by BP in the report was aimed at the cementing job completed by Halliburton.(HAL)

>>BP: No Smoking Gun in Oil Spill

The convention legal wisdom on Transocean's contract with BP, even before the BP report, is that it offers the rig operator complete indemnification.

It was a bullish day for the oil drillers on Friday, with the energy sector again outpacing gains in the broader markets. Transocean's gains were more than twice the level of any other driller, and trading reached its daily average volume for Transocean before the midday mark.

A pipeline leak and the suspension of the pipeline run by Enbridge Energy Partners(EEP) helped to life the price of crude oil on Friday.

Some analysts have contended that even though clouds still surround Transocean, the value of the company's business could support a share price of $70, though given the legal uncertainties they may not be telling investors to place a bet on it. Transocean shares were at $92 stock before the oil spill began.

>>Transocean Shares: Room to Run

-- Written by Eric Rosenbaum in New York.

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>>Do You Trust BP?

>>BP: No Smoking Gun in Oil Spill

>>Transocean Shares: Room to Run

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