Boston, MA 10/21/2013 (wallstreetpr) – Energy giant having a market capitalization of more than 135 billion dollars, BP plc (ADR) (NYSE:BP) seems to be heading towards some sort of freezing as to how much damage did it cause in 2010 Oil Spill disaster. During the last two week, company and government were debating about the quantum of oil spill that killed 11 workers in the Deepwater Horizon explosion.
With this, the second phase of BP’s trail comes to an end. As per sources, it is believed that government had pegged the volume of oil spill to be in excess of 176 million gallons. This is what government estimates had been released in Gulf of Mexico. This figure is critical both for government and more importantly for BP as it would be used as basis for calculation of any penalties which have to be imposed on BP under the Clean Water Act. But as expected, BP does not subscribe to government’s estimates and has come up with its own figure of 103 million gallons.
For investors of BP, this development brings a bit of clarity about the extent of liability of BP. If US government figures are used, then BP might have to shell out in excess of $18 billion. But if company’s figures are used as basis of penalty calculation, the BP’s books would receive a dent of around $10.5 billion. There is still no clarity as to when the exact figure would be arrived at but speculators believe that it is possible that it could be in range of 130-140 million gallons. This translates into a penalty of close to 14 billion dollars. Since 2010, BP has paid out $3.7 billion in claim settlements to various agencies and individuals. And in 2010, government had also levied a prohibitive $7.8 billion punitive damage on the company. Analysts are not fully subscribing to these developments and are holding onto their earlier ratings.
