BP shares higher following US spill report
Thursday, January 6, 2011
LONDON (AP) — Shares in BP PLC opened higher Thursday after a U.S. presidential commission criticized the oil company’s contractors and regulators as well as BP for the Gulf of Mexico oil spill.
BP shares were up 2.1 percent to 510 pence ($7.90) in midmorning trade on the London Stock Exchange.
In a 48-page excerpt of the final report released Wednesday, the commission described systemic problems in the oil and gas industry and government regulators which contributed to the blowout of the Macondo well on April 20.
“Better management by BP, Halliburton and Transocean would almost certainly have prevented the blow-out,” the commission said.
“The blowout was not the product of a series of abberational decisions made by a rogue industry or government officials that could not have been anticipated or expected to occur again. Rather, the root causes are systemic, and absent significant reform in both industry practices and government policies, might well recur,” the commission added.
Richard Griffith, analyst at Evolution Securities, said the report “supports our view that a gross negligence case against BP looks hard to prove and could ultimately reduce BP’s liabilities.”
“We have argued for some time that it would be hard to prove gross negligence against BP in which case even if BP assumes 100 percent liability for Macondo the impact would be $25 billion to $30 billion,” he said.
However, he added that the share price implies that the market fears that the liability will be as high as $50 billion.
The full report is due to the president Jan. 11. Separate investigations are under way by the Justice Department and a joint U.S. Coast Guard-Bureau of Ocean Energy Management, Regulation and Enforcement panel.
BP’s own investigation released on Sept. 9 shared the blame among BP, rig owner Transocean Ltd. and contractor Halliburton Co.
“Today’s release largely adopts the preliminary findings of the commission’s chief counsel, and like several other inquiries, including BP’s internal investigation, concludes that the accident was the result of multiple causes, involving multiple companies,” BP said in a statement on Wednesday.
Transocean Ltd., which owned the rig contracted by BP, said in response to the commission’s findings that “the procedures being conducted in the final hours were crafted and directed by BP engineers and approved in advance by federal regulators.”
Halliburton Co., the cement contractor, also said it acted at the direction of BP and was “fully indemnified by BP.”
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