In a twist of fate, British energy giant BP plc (BP - Free Report) received adverse ruling from New Orleans District Judge Carl Barbier over settlement payments relating to the 2010 Deepwater Horizon oil spill.
Per the court verdict, the British energy giant has to adhere to the earlier interpretation of the settlement over the spill which tentatively suggests higher payouts for damages. BP – earlier dissatisfied with court-appointed settlement administrator Patrick Juneau – appealed for a revision to the 5th U.S. Circuit Court of Appeals. The company’s plea cited concerns that Juneau is compensating even those companies unaffected by the disaster. The 5th U.S. Circuit Court of Appeals ordered Barbier in December to review Juneau's methodology.
As a reminder, on Apr 20, 2010, offshore driller Transocean Ltd’s (RIG - Free Report) ultra-deepwater Horizon drilling platform, contracted to BP, sank following an explosion while operating in the U.S. GoM off the coast of Louisiana. The incident killed 11 workers and spewed more than 200 million gallons of crude in what was touted as the country’s worst oil spill ever. Subsequently, a moratorium was imposed on offshore drilling at water depths of more than 500 feet in the region, which was lifted on Oct 12, 2010.
The breach of Clean Water Act along with other laws led the U.S. government to take legal action against the main defendants in the trial – BP, Transocean and Halliburton Company (HAL - Free Report) . Several other companies are also involved in the trial.
However, BP already raised its estimate for settlement payments to $9.2 billion in October, from the earlier apprehension of $7.8 billion. Showing strong investor confidence in the festive season, the company’s stock surged consecutively for six trading days and hit a new 52-week high of $48.07 on Dec 26, 2013.
London, England-based BP plc is one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products. It operates in three segments: Exploration and Production, Refining and Marketing, and Other Businesses and Corporate.
Even though the company remained active in strategic development during the third quarter, it expects flattish production in the upcoming quarter due to planned major turnaround activity and repairs in the high-margin North Sea, planned maintenance in Alaska as well as the continued impact of divestment. For the next quarter, the company expects refining margins to remain under significant pressure due to high gasoline stocks and new competitor capacity addition as well as lower seasonal demand.
BP carries a Zacks Rank #3 (Hold). Better-ranked stocks in the oil and gas sector include Harvest Natural Resources Inc. which holds a Zacks Rank #1 (Strong Buy).