BP shares dropped 6% yesterday after a US judge said it was ‘grossly negligent’ in the 2010 rig explosion and spill
BP should be able to meet the cost of up to $ 18 billion of new fines for the 2010 Gulf of Mexico oil spill without major asset sales or a big cut in its dividend, analysts say.
The oil group’s shares dropped nearly 6% yesterday after US District Judge Carl Barbier in New Orleans, Louisiana, said it was “grossly negligent” in the April 2010 rig explosion and spill that killed 11 workers.
However, BP said it would appeal the ruling, meaning any decision on indemnities could be years away.
BP has set aside only $ 3.5 billion for fines under the Clean Water Act, part of a much broader series of provisions for cleanup, compensation and damages that exceed $ 42 billion.
But it could be liable for up to $ 17.6 billion if its appeal against the “gross negligence” ruling is denied.
The unwelcome news, at a time when many oil firms are struggling to cut costs in the face of shrinking profits, is unlikely to have much impact BP’s dividend payments in the near-term, as the company had $ 27.5 billion in cash and equivalents on its balance sheet at the end of the second quarter.
The case will go on for months or even years with Barbier set to assign damages after the next phase of a civil trial over the accident, scheduled for January 2015.
The two earlier phases of the trial looked at how to apportion blame and examined how much oil spilled.