The price of crisis at Transocean …

Transocean (RIG) got some press yesterday for the $267-million gain it recorded from an insurance settlement for the Deepwater Horizon, its drilling platform in the Gulf of Mexico that burned and sank after the well it was drilling blew on April 22. It also announced net income of $715 million. But deeper in the company’s quarterly report, Transocean offers some insight into just what it costs to be involved in a crisis of this size and complexity. We’re not talking about ultimate liability for the spill. For one thing, that number isn’t known yet. For another, Transocean denies having much responsibility: It says, essentially, that BP is responsible for oil discharges under water, while Transocean is responsible for those on or above the surface. Or, as Transocean puts it: “As the responsible party for Deepwater Horizon, we believe we are responsible only for the discharges of oil emanating from the rig. Therefore, we believe we are not responsible for the discharged hydrocarbons from the Macondo well.” (Russell Gold’s Wall Street Journal piece yesterday gives a good summary.) But here, we’re talking about the raw costs of dealing with the crisis and the aftermath — the kind of costs that Transocean is going to incur even if its argument prevails, and which will take some effort to recoup from others. Here’s the litany as Transocean spells it out: $70 million of insurance deductibles; $30 million or so in higher insurance premiums; $36 million in legal expenses “related to lawsuits and investigations”; and $44 million “primarily related to our internal investigation” of the incident, “including consultant costs, travel costs and other miscellaneous costs.” That’s a $180-million price-tag in operating costs for 2010, before any liability issues are considered. And it’s far from unreasonable to think such costs will continue, and are reflected to varying degrees at other companies. If you’re really curious about the legal issues, incidentally, Transocean also filed a copy of what it calls the Deepwater Horizon Drilling Contract, which clocked in at somewhere around 280 pages when we briefly considered printing it. Image source: U.S. Coast Guard via Flickr ———— See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at pro@footnoted.com.

Designed for investors who want to dig into the details, but don’t have the time.

The Enterprising Investor’s Guide 6-28-2010

The price-to-peak earnings multiple slipped to 12.1x as of last week’s close.

By Alan Wheatley , China Economics Editor BEIJING, Nov 24 (Reuters) – Trying where Barack Obama failed a week ago, a trio of top European Union policymakers troops to China this weekend to press the case for a stronger yuan.

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PREVIEW-EU has faint hope in quest for stronger yuan (at Reuters)

LONDON (AP) — The international economy is still fragile and vulnerable to shocks despite recent improvements in financial markets, the managing director of the International Monetary Fund said Monday. Dominique Strauss-Kahn told business leaders in London that he believes the worst of the economic crisis has passed — but that problems remained.

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IMF chief: Global economy still fragile (AP)

By Andrea Hopkins TORONTO (Reuters) – It was supposed to be a year of blood-letting, but Canada’s big banks are poised to close 2009 with another decent quarter as strong trading revenues again offset big loan losses. After stronger-than-expected performances through the worst of the financial crisis, Canadian lenders should report a profitable final quarter of their fiscal 2009, which ended in October.

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Canada banks to cap 2009 with decent quarter

WARSAW (AFP) – The European Union may have inched out of its sharpest recession since the global slump of the 1930s, but green shoots are not emerging uniformly across the 27-nation bloc’s eastern member states. Contrasts are sharp among the 10 ex-communist countries that have joined the EU since 2004. The situation in Poland, the only EU nation to have enjoyed sustained growth this year, compares with the stark lot of countries such as Latvia or Hungary, where the economies have been in freefall

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EU recession over, but sharp contrasts in east

MINSK (AFP) – Scorned as Europe’s last dictatorship, ranked dismally by rating agencies and possessing few natural resources, Belarus has struggled to attract foreign investors. But now, in a push to revive its cash-strapped economy and lessen its dependence on Russia, the reclusive state is seeking to open up to the West and overturn its image as “the last remaining true dictatorship in Europe,” a label used by former US secretary of state Condoleezza Rice

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Long-isolated Belarus appeals to foreign investors

WASHINGTON (AFP) – US President Barack Obama, back from a tour of Asia, called Saturday for the United States to produce more goods to sell across the Pacific, touting trade as a way to revive the troubled US economy. Facing rising unemployment and slipping poll numbers, Obama assured the public that creating new jobs back home was his top priority on the week-long tour that took him to Japan, Singapore, China and South Korea

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Obama touts Asia trade to create jobs

WASHINGTON (AFP) – US lawmakers criticized US President Barack Obama’s administration Thursday for not pressuring China enough over its rigid currency as they set the stage for slapping import duties on Chinese goods. As Obama returned home without any pledge from China to make its yuan flexible, Republican and Democratic lawmakers sent a letter to the Commerce Department calling for an investigation into “China?s currency manipulation.” It is “a potential first step in a process that could lead to significant, US-imposed tariffs on imports from China,” said Democratic Senator Charles Schumer, who jointly wrote the letter with Republican Senator Lindsey Graham. The Obama administration, like the Bush administration before it, has refused to brand China a currency manipulator under a law requiring it to determine whether any foreign economy manipulates its currency against the US dollar.

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US lawmakers threaten China sanctions over currency

WASHINGTON (AFP) – US lawmakers criticized US President Barack Obama’s administration Thursday for not pressuring China enough over its rigid currency as they set the stage for slapping import duties on Chinese goods. As Obama returned home without any pledge from China to make its yuan flexible, Republican and Democratic lawmakers sent a letter to the Commerce Department calling for an investigation into “China?s currency manipulation.” It is “a potential first step in a process that could lead to significant, US-imposed tariffs on imports from China,” said Democratic Senator Charles Schumer, who jointly wrote the letter with Republican Senator Lindsey Graham.

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US lawmakers threaten China sanctions over currency