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BP's Claim to Delay Spill Payments Rejected

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Oil giant BP plc’s (BP - Free Report) request to a federal judge to delay oil spill compensation payments to seafood workers was denied. BP had appealed to U.S. District Judge Carl Barbier to put on hold the second phase of payments under the $2.3 billion Seafood Compensation Fund.

Per the lawsuit, alleged Texas lawyer Mikal Watts, fraudulently claimed to represent 40,000 deckhands in the seafood compensation program, apart from using fake Social Security numbers and other fake documents that calls for prompt suspension of all payments.

However, the argument by the Plaintiff’s Steering Committee was that Watts and his clients – real or not – signify a small portion of overall claims and have insignificant impact on the ultimate settlement. The plaintiff opposed to the delay, while the judge pushed BP lawyers to prove that claims from the deckhands, which Watts says he represents, are key to deciding the settlement value.

The judge was unconvinced and commented it would be several months before a second phase of payment is distributed if the seafood compensation plan is rejected at present.

The attorney for the class suing BP also commented that people who may be due valid payments should not have claims delayed because of accusations against Watts.

BP estimates the total payment under the spill compensation to exceed $7.8 billion. Under a substantial settlement deal attained last spring, thousands of Gulf Coast businesses and residents hurt by the 2010 BP oil spill in the Gulf of Mexico have started to receive payments.

As part of the first round of payments, the Seafood Compensation Fund has already processed 21,871 claims and handed out over $1 billion in payments to claimants. The terms of the settlement states that any money remaining in the fund after the first round of payments will be distributed among claimants in a second round.

BP holds a Zacks Rank #3 (Hold). However, there are better-ranked companies in the oil and gas industry. These include Helmerich & Payne, Inc. (HP - Free Report) , Matrix Service Co. (MTRX - Free Report) and Patterson-UTI Energy Inc. (PTEN - Free Report) , each with a Zacks Rank #1 (Strong Buy).

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