Oil giant BP plc’s (BP) ongoing court case tied to its 2010 Gulf of Mexico (GoM) oil spill suffered a setback on Thursday. U.S. District Judge Carl Barbier in New Orleans refused to reverse his earlier verdict that the company had been reckless as well as negligent.
The oil firm had earlier agreed to pay $4 billion in criminal fines. However, with judge Barbier upholding his earlier verdict, another $18 billion of penalties for violating the federal Clean Water Act could be slapped on the company.
As a reminder, on Apr 20, 2010, offshore driller Transocean Ltd’s (RIG) 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). Several other companies have also been taken to court.
As per the federal government, BP’s Macondo well leaked nearly 5 million barrels of oil over 87 days till it was capped. BP argues that the amount was about 2.45 million barrels. It is only after finding out the total quantity of oil that was spilled, that the full extent of BP’s financial liability will be determined. BP had continuously maintained that a strong ruling over America’s biggest offshore oil accident could be evaded.
London-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.
BP – U.K.’s third largest oil company by market value after Royal Dutch Shell plc (RDS.A) – holds a Zacks Rank #4 (Sell).
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