Don’t Throw the RIG Out with the Bathwater

Transocean (NYSE:RIG) shares hit $65 last week, and I think that’s a near-term bottom. Yes, there’s a lot of finger-pointing at Transocean, mostly by people who are immensely ignorant of how the drilling business works. Or they have a vested interest in shifting the blame.

At the end of the day, BP hired Transocean to drill a well that BP designed. If Transocean followed the specs, you can’t pin the donkey-tail on these guys. The worst anyone can say – and they’re saying it – is that Transocean had a bad blowout preventer (BOP) that didn’t function.

To which I say, ‘Oh really?’ We’ll find out, eventually, when the well is dead and they pull that BOP off the bottom. But let’s not beat up too hard on Transocean or the BOP. Not yet. I’m inclined to think that there’s something – some foreign object – jamming the BOP. Even the best of equipment is not designed to withstand every insult…

It all comes back to human error. Yes, some equipment and technology should’ve worked better. But it’s mostly human factors and bad risk management. People should’ve caught what was going on. They didn’t. A series of cascading events led to a chain of failures and disaster.

By Byron King

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