UPDATE 2-Transocean sees $200 mln cost growth from rig loss

* 2010 operating/maintenance costs seen at $5.2-$5.5 bln

* To record $270 mln insurance gain, lose $130 mln in revs

* Says it is indemnified against any oil pollution claims

* Shares down 5.3 pct
(Adds more from conference call, byline; updates share price)

By Braden Reddall

SAN FRANCISCO, May 6 (BestGrowthStock) – Transocean Ltd (RIGN.S: )
(RIG.N: ) expects about $200 million in additional legal and
insurance costs this year related to the explosion and sinking
of its Deepwater Horizon rig, executives said on Thursday.

Shares of the company were down 5.3 percent, taking a
further hit from confirmation that oil from the spill that
followed the rig explosion and fire had reached a Louisiana
island. [ID:nN05211341]

As for Transocean’s liability for the oil spill, Newman
said its contract with operator BP Plc (BP.L: ) indemnified
Transocean against claims related to pollution from the well.

“We believe in this particular instance the contract is
pretty clear about that,” he said. “Our industry has a long
history of contract sanctity, and we expect BP to honor that.”

Transocean will start incurring the higher costs resulting
from the accident this quarter, Chief Executive Steven Newman
said on a conference call to discuss quarterly earnings.

It now sees 2010 operating and maintenance costs at between
$5.2 billion and $5.5 billion, up from $5 billion to $5.4
billion before, Chief Financial Officer Ricardo Rosa said.

Transocean renews its insurance annually at this time of
year, and Rosa said the discussions were “reasonably fluid” and
he did not rule out having the company carry more risk itself.

Under its current coverage, the company said on Wednesday,
it generally retains the risk for liability over $1 billion.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a column on Transocean, see [ID:nN06187420]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ The Horizon, which sank two weeks ago in an accident that
now threatens an environmental disaster, was insured for $560
million, and Transocean will record an accounting gain of $270
million on the total loss of the rig.

But Rosa said it would also lose out on $130 million in
contract drilling revenue this year without it.

Asked by an investor on the call about a letter sent out by
BP to drilling contractors to “verify the conditions” of their
blowout preventers, Newman confirmed Transocean had received
it. “We are currently going through the exercise of responding
to the questions that are addressed in that letter,” he said.

The Switzerland-based company had reported on Wednesday a
better-than-expected first-quarter profit (Read more your timing to make a profit.). [ID:nN05181866]

Transocean’s stock, already down by a fifth since the April
20 explosion and fire on the Horizon, fell another 5.3 percent
to $68.91 on the New York Stock Exchange on Thursday.

Stock Market Today

(Reporting by Braden Reddall; editing by Gunna Dickson)

UPDATE 2-Transocean sees $200 mln cost growth from rig loss