The Canadian Press - ONLINE EDITION

BP stock hit by court negligence ruling that could cost oil company another $18 billion

  • Print

NEW YORK, N.Y. - A judge's ruling in the 2010 Gulf of Mexico oil spill case that could cost BP an additional $17.6 billion in fines sent the company's shares tumbling Thursday.

BP was found by U.S. District Judge Carl Barbier to have acted with "gross negligence," leading to the worst U.S. offshore oil spill. The ruling triggers the highest possible fines under the Clean Air Act of $4,300 per barrel of oil spilled.

The number of barrels spilled is being debated but is likely to fall between 2.4 million and 4.1 million barrels. That translates to a fine of between $10.3 billion and $17.6 billion.

While BP has already spent at least $24 billion in spill-related expenses to date, including cleanup costs and payments to affected businesses and residents, it had set aside just $3.5 billion to cover what it thought would be a much smaller fine for actually spilling the oil.

BP shares fell $2.82, or 5.9 per cent, to $44.89, reducing the company's market value by $8.66 billion. The shares were near $60 per share just prior to the April 2010 spill.

Bruce Huber, associate professor of law at the University of Notre Dame, who specializes in environmental, natural resources and energy law said investors had already assumed BP would pay a bigger fine than the company hoped it would face.

That protected BP's shares from falling even further, Huber said.

Analysts at Jefferies, for example, estimated fines of $10 billion. Raymond James analysts estimated fines of $8 billion.

Still, investors have a few new concerns based on Thursday's ruling: The prospect of an additional big outflow of cash, and not knowing how or when the fine will be finalized or paid.

BP said it would appeal the ruling, a process that puts off a final decision on the size of the fine and also likely delay other pending court cases concerning the spill.

"It's pretty severe," said Justin Jenkins, an analyst at Raymond James, about the ruling. "And now there are even more unknowns about what the final number will be."

BP sold $38 billion in assets, including refineries and interests in oil and natural gas fields, to fund its initial oil spill expenses and it is in the midst of a program to sell another $10 billion worth of assets by next year.

The new fines may require yet more asset sales, analysts said, though BP could also begin reserving money for the fine even as it appeals the decision. The company remains very profitable. Last year BP earned $24 billion on sales of $379 billion.

Two of BP's partners in the drilling project, they Swiss-based drilling rig owner Transocean Ltd. and Houston-based cement contractor Halliburton were also found to have some responsibility for the disaster. But BP — and its shareholders — who bore the brunt of the decision.

Transocean shares fell 29 cents to $37.76. Halliburton shares fell $1.03 to $66.55.

Jonathan Fahey can be reached at http://twitter.com/JonathanFahey .

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

City Beautiful trailer: How architecture shaped Winnipeg's DNA

View more like this

Photo Store Gallery

  • Goose sits in high grass near Marion Friday afternoon for cover -See Bryksa 30 Day goose challenge- Day 18 - May 25, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)
  • Jia Ping Lu practices tai chi in Assiniboine Park at the duck pond Thursday morning under the eye of a Canada goose  - See Bryksa 30 Day goose challenge Day 13- May 17, 2012   (JOE BRYKSA / WINNIPEG FREE PRESS)

View More Gallery Photos

Poll

Should Premier Greg Selinger resign?

View Results

View Related Story

Ads by Google