GULF SPILL:

Transocean reports $267M gain, discloses BP contract

This story was updated Thursday 6:40 a.m. EDT

Transocean Ltd. has reported a $267 million gain from the insurance payments it received after its Deepwater Horizon rig sank in the Gulf of Mexico, killing 11 men and spawning the largest-ever accidental release of oil.

That gain was offset by $18 million in expenses for litigation matters not connected to the spill, the Switzerland-headquartered company reported in its second-quarter results. And other company documents note that the rig had a backlog of $590 million worth of contracts when it sank April 22.

Transocean's results include $82 million in increased expenses from the spill, or $69 million after tax.

The company also attached its contract with BP America Production Co. for drilling the now-capped well. The quarterly report states the contract document shows definitively that BP is liable for paying for the massive oil spill and Transocean is not.

"We believe we are entitled to contractual defense and indemnity for all wrongful death and personal injury claims made by non-employees and third-party subcontractors' employees as well as all liabilities for pollution or contamination, other than for pollution or contamination originating on or above the surface of the water," the company says in the quarterly report.

The contract had not previously been publicly available. BP criticized its investment partner Anadarko Petroleum Corp. after it publicly filed the agreement between the companies with regulators. BP said Anadarko had improperly disclosed confidential business information.

Transocean drilled the well in the Gulf of Mexico that erupted on April 20, causing the largest-ever accidental oil spill. But the contract states that BP is liable for all damages caused by blowouts or other subsea accidents.

But there is language in the contract that appears to hold Transocean liable up to $10 million if it is negligent and pollution from the well causes property damage, sickness, injury or death to third parties. That amount of money is of little consequence in a disaster that quickly racked up damages in the billions.

BP has publicly blamed Transocean for the accident, saying it deployed a faulty blowout preventer that failed to stop the explosion on Transocean's Deepwater Horizon rig.

"It wasn't our accident, but we are absolutely responsible for the oil, for cleaning it up, and that's what we intend to do," BP Group CEO Tony Hayward told NBC's "Today Show" in May. "The drilling rig was a Transocean drilling rig. It was their rig and their equipment that failed, run by their people, their processes."

But BP has not tried to bill the contractor for its spill response costs as it has its partners, Anadarko Petroleum Corp. and a subsidiary of Japan's Mitsui & Co.

The federal government, on the other hand, has billed Transocean and a Lloyd's of London syndicate that insured it for its spill response costs, along with BP, Anadarko and Mitsui.

BP spokeswoman Elizabeth Ashford said today that the numerous investigations into the cause of the action may uncover facts that invalidate the Transocean's protections in the contract.

"BP believes the combination of uncovered facts and the applicable law may show that Transocean is not entitled to indemnification under the contract," Ashford said.

Transocean acknowledged BP's position in its quarterly statement, saying BP has stated it won't commit to indemnifying Transocean from liability.

BP, it said, "has asserted that the facts are not sufficiently developed to determine who is responsible and has cited a variety of possible legal theories based upon the contract and facts still to be developed."

Transocean says BP's opinion is wrong and that the oil company will be required to accept liability for the explosion and spill.

The Transocean statement also says the company has voluntarily agreed to provide the Justice Department with 30 days' notice prior to repurchasing any additional shares under its share-repurchase program and prior to making substantial cash payments out of its U.S. entities, other than in the ordinary course of business. The company also said it expects discussions with DOJ will continue.

Click here to view Transocean's second-quarter report.