Eduardo Musa, a former executive at Petrobras has testified to receiving what he says were payments made by someone claiming to be a Transocean agent. Musa testified that in late 2007 he was approached by one of Cervero’s assistants, who offered part of the commission if Transocean won a contract to operate the Petrobras 10,000. Transocean Ltd. is now the third offshore drilling company that has been linked officially to the Petrobras carwash corruption probe. This article is an update to my preceding article on Transocean (NYSE:RIG), published on Sept 23, 2015, regarding the June fleet status. Today, We read that: A former executive at Brazil's state-run oil company has testified to receiving what he says were payments made by someone claiming to be a Transocean agent in exchange for a rig-operation contract from Petrobras. (Petrobras 10000 rig) Eduardo Musa, who has turned state's witness in a probe by federal prosecutors into Petrobras, said he was offered the alleged Transocean payments by an individual he described as an assistant to Nestor Cervero, former head of Petrobras's international division, in which Musa also worked, according to a transcript of his Aug. 26 testimony published on the website of a court in Curitiba, Brazil, overseeing the case...Cervero was sentenced in August to more than 12 years in prison for corruption and money laundering... Musa testified that in late 2007 he was approached by one of Cervero's assistants, who offered part of the commission if Transocean won a contract to operate the Petrobras 10,000 drilling rig... Petrobras didn't immediately respond to e-mailed questions about Musa's allegations. The evidence against Cervero was collected "through intimidation" and his defense is working to have the testimonies thrown out, his lawyer Ribeiro said. Musa never spoke about the contract directly with Cervero, according to the testimony. None of the testimony indicates he had any contact with Transocean apart from the alleged agent named Carlos Moura. Transocean Ltd. is now the third offshore drilling company that has been linked officially to the Petrobras carwash corruption probe. On September 2, 2015, Petrobras terminated the UDW Titanium Explorer, without compensation. The Notice of termination alleged that Vantage has "breached its obligations under the Drilling Contract". The Notice does not provide any explanation as to the facts and conduct that constitute a breach by Vantage of its obligations under the Drilling Contract. In fact, Petrobras, could not really link Vantage Drilling to the Carwash Corruption Probe, but it was quite evident that it played a role in Petrobras' decision to terminate the contract. The case has been contested by Vantage Drilling and M. Paul Bragg, CEO, who claim that the company had nothing to do with any bribery. In my preceding article regarding the Vantage Drilling situation, and the Titanium Explorer. I indicated what happened previously. On August 7, 2015, in a preceding article, I explained the situation between Petrobras, MM Zelada and Padilha, Hsin Chi Su (chief executive of Taiwanese shipping firm TMT) and Vantage Drilling. It started on July 6, 2015, when M. Jorge Zelada was arrested on suspicion of receiving bribes for the Titanium Explorer and another unspecified rig operated by Ensco (ESV). Jorge Zelada was the director of the International division at PBR, from 2008 to 2012. On July 31, 2015, the Brasilian media indicated that M. Hamylton Padilha, acting as an agent representing numerous International companies in connection with their drilling contracts in Brazil, admitted wrongdoing to the police. He was suspected of receiving bribes on the Titanium Explorer drillship operated by Vantage Drilling, and another rig operated by Pride International, a company acquired by Ensco in 2011. The investigation was quick, and Carlos Fernando dos Santos Lima indicated earlier this week that it had revealed evidence of corruption by nearly 15 foreign firms. Finally, on August 7, 2015 (Read link indicated above), The Brazilian prosecutors presented formal charges against M. Jorge Zelada, the former head of state-run oil firm Petrobras' international division, and five others, saying they favored U.S. company Vantage Drilling in a rig contract. M. Zelada will stand trial with dozens of other engineering tycoons and former Petrobras executives if a judge accepts them. One of the six charged by the prosecutor was Hsin Chi Su, chief executive of Taiwanese shipping firm TMT. What was damaging at the time is that the prosecutor's office indicated that in exchange of bribes up to $31 million to M. Zelada, Petrobras officials improperly favored Vantage Drilling for a contract with the oil company for the use of its Titanium Explorer rig. "The award of the contract was rife with irregularities", prosecutors said. Ultra-Deepwater Titanium Explorer 1Titanium ExplorerBuilt and delivered 3/2012DSME-UDW End of contract January 2020 585 [Petrobras] US GoM The contract was terminated early September, without compensation and the UDW rig is now cold stacked, while Vantage Drilling is suing Petrobras for wrongful termination and a loss of nearly $926 million in contract backlog. Ensco has not been affected,so far , whereas one of the employees of Pride International admitted some wrongdoing. M. Paul Bragg resigned as president and CEO (and as a director) of Pride International, effective June 29, 2005. More than six years later, on Feb. 7, 2011, Pride International and Ensco created the second largest offshore driller at the time, with a combined estimated backlog of $10 billion. M. Louis Raspino was the CEO of Pride International at the time. A few people have commented on a possible connection between Bragg, Pride International, Ensco, Vantage Drilling and Petrobras. However, the timing of his resignation and the merger of Pride with Ensco totally exonerates Bragg of any wrongdoing, at least at first glance. Paragon Offshore (NYSE:PGN) recently had one of its rig, the DPDS2, terminated by Petrobras and may have another one, the DPDS3, terminated as well. However, the dispute is not related to the carwash corruption probe. Today, it is the turn of Transocean Ltd. to bite the dust, and whether the allegations are true or not, it will not change the bad press and the negative effect on the company stock, unfortunately. Already the stock price dropped after hour. Petrobras has many offshore drillers actually drilling: According to Rigzone data, Petrobras operates 56 rigs (Tender, Platform, Jackup, Drillship and Semi-sub) owned by 15 different offshore drillers including Petrobras itself. Only 48 rigs are classified as drillships or semi-submersibles. In fact, only eight offshore drillers are involved with Petrobras, and can be traded in the USA market: Diamond offshore (NYSE:DO)Ensco Plc. (ESV)Noble drilling (NYSE:NE)Ocean Rig (NASDAQ:ORIG)Paragon Offshore (NYSE:)Seadrill Ltd. (NYSE:SDRL)Vantage Drilling (OTCPK:VTGDF) CompanyTotalPlatformTenderJackupDrillshipSemi-sub Atlantica Tender drilling Ltd1010001Diamond Offshore4000132Ensco Plc.500014 3Noble Drilling100001 Odebrecht Oil & Gas7000435Paragon Offshore3 200011 6Seadrill Ltd.5000237Transocean Ltd.5000328Vantage Drilling0000Terminated0 Rig status related to the eight Offshore drillers: ("1") PBR right to terminate contract in case of excessive downtime. This situation is slowly affecting the whole offshore drilling industry. Who will be next? Seadrill, Ocean Rig UDW, Diamond Offshore or Noble. It is NOT what the OSD shareholders wanted to hear... And I hope that this situation will be clarified soon. Unfortunately, this "news" will be used to hammer the stock no matter what RIG will say or do, I am afraid. RIG Chart I will be extremely surprised, if really Transocean did something wrong here. Most of the OSD who dealt with Petrobras, at the time, were more the victims than anything else. A simple look at the Titanium Explorer and Vantage is enough to realize that the offshore drilling companies were not aware of this illegal activity and were used by middlemen and Petrobras executives. Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks. More