British energy giant BP plc (BP) announced that it would appeal in a U.S. court over settlement payments relating to the 2010 Deepwater Horizon oil spill. In 2012, a settlement of $7.8 billion was reached over the reimbursements to be made for the 2010 Gulf of Mexico (GoM) oil spill.
As a reminder, on April 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 are also involved in the trial.
The appeal from BP would be heard in the 5th U.S. Circuit Court of Appeals. The company will plead to revise the earlier settlement, citing concerns that it might to compensate companies unaffected by the disaster.
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 its strategic development during the first quarter, it expects lower production in the upcoming quarter due to normal seasonal turnaround activity, particularly high margin production in the Gulf of Mexico and the North Sea, as well as higher costs. For the second quarter,the company expects refining margins to be subdued.
For 2013, the company expects refining margins to experience a downfall from the 2012 level due to turnaround activity. The company's petrochemicals margins are also expected to remain weak during 2013.
BP carries a Zacks Rank #2 (Buy). However, there are other Zacks Ranked #1 (Strong Buy) stock like PetroQuest Energy Inc. (PQ) which are expected to perform even better over the short term.
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