Subsequent Events

12 Months Ended

Dec. 31, 2011

Subsequent Events

Subsequent Events

Note 28—Subsequent Events

Debt—Subsequent to December 31, 2011, we redeemed the remaining $30 million aggregate principal amount of the Series B Convertible Senior Notes.

Drilling fleet—Subsequent to December 31, 2011, we entered into agreements to sell the Standard Jackups, GSF Rig 136, Transocean Nordic and Transocean Shelf Explorer, and we reclassified to assets held for sale the rigs and related equipment, having an aggregate carrying amount of $59 million.

Discontinued operations—Subsequent to December 31, 2011, we entered into an agreement to sell the assets of Challenger Minerals Inc.

U.S. tax investigations—Subsequent to December 31, 2011, we received an assessment from the U.S. tax authorities related to our 2008 and 2009 U.S. federal income tax returns.  The significant issues raised in the assessment relate to transfer pricing for certain charters of drilling rigs between our subsidiaries and the creation of intangible assets resulting from the performance of engineering services between our subsidiaries.  These items would result in net adjustments of approximately $473 million of additional taxes, excluding interest.  An unfavorable outcome on these adjustments could result in a material adverse effect on our consolidated statement of financial position, results of operations or cash flows.  Furthermore, if the authorities were to continue to pursue these positions with respect to subsequent years and were successful in such assertions, our effective tax rate on worldwide earnings with respect to years following 2009 could increase substantially, and could have a material adverse effect on our consolidated results of operations and cash flows.  We believe our returns are materially correct as filed, and we intend to continue to vigorously defend against all such claims.

Norway tax investigations—In January 2012, the Norwegian authorities supplemented the previously issued criminal indictments by issuing a financial claim of approximately $315 million, jointly and severally, against our two subsidiaries, the two external advisors and the external tax attorney.  This compensation claim directly overlaps with an existing civil tax assessment and does not represent any incremental financial exposure to us.  In February 2012, the authorities dropped the previously existing tax assessment.

Macondo well incident—On January 26, 2012, the MDL Court ruled that BP is required to indemnify us for compensatory damages asserted by third parties against us related to pollution that did not originate on or above the surface of the water, even if the claim is the result of our strict liability, negligence, or gross negligence. The court also held that BP does not owe us indemnity to the extent that we are held liable for punitive damages or civil penalties under the Clean Water Act.  The court deferred ruling on BP’s argument that we breached the drilling contract or materially increased BP’s risk or prejudiced its rights so as to impair BP’s indemnity obligations.  Our motion for partial summary judgment and the court’s ruling did not address the issue of contractual indemnity for criminal fines and penalties.  The law generally disallows contractual indemnity for criminal fines and penalties as against public policy.

On February 22, 2012, the MDL Court ruled that we are not liable as a responsible party for damages under OPA with respect to the below surface discharges from the Macondo well.  The court also ruled that the below surface discharge was discharged from the well facility, and not from the Deepwater Horizon vessel, within the meaning of the Clean Water Act, and that we therefore are not liable for such discharges as an owner of the vessel under the Clean Water Act.  However, the court ruled that the issue of whether we could be held liable for such discharge under the Clean Water Act as an “operator” of the well facility could not be resolved on summary judgment.  The court did not determine whether we could be liable for removal costs under OPA, or the extent of such removal costs.