Boston, MA 12/16/2013 (wallstreetpr) – Anadarko Petroleum Corporation (NYSE:APC) had a nasty surprise at the courts last week. The judge, before whom the company has been deposing on a suit, where it has filed for bankruptcy, denied the company the right to waive-off environmental costs of a unit it had sold in 2005.
The judge ruled that the Kerr-McGee unit, from which the company spun-out the Tronox, had failed to complete its environmental cleaning and therefore people should be compensated for the damages caused by the effluents.
The government had proposed Anadarko Petroleum Corporation (NYSE:APC) should clean up over 2700 sites that carried effluents and contaminants. It had also directed that the company should compensate the ‘torts’ or legal protection inherent to citizen due to the practices of the land, to the tune of $25billion.
The process that APC and Kerr-McGee are believed to have adopted as well as the spinning –off of the unit was culpable and hence required to be reworked in the form of compensation.
Now the judge has proposed that the company pay as much as $14.2 billion in damages. The significance of the ruling is its emphasis on environmental enforcement and is said to be the largest ever on a company by US supreme authority.
Anadarko Petroleum Corporation (NYSE:APC), even if it were to consider appeal would only suffer from prolonged legal entanglement leading to higher costs. Therefore, the current suggestions before the company are to press for a settlement.
Another impact the ruling had on APC stock prices has been the immediate exposure the company has had towards the case. There is more money required, if the company chooses to further appeal. Already cash-strapped to the tune of $1.4billion, it will have to sell of some of its assets based in Mozambique or Brazil to earn $18 billion, ensuring that even in the case of high penalties, it will be able to bear the costs.
