BP Says Partner Stocks Share Liability in Gulf (BP, APC, RIG)

Stakeholders are quick to point fingers at each other

It had to happen eventually. BP plc (NYSE: BP) and Anadarko Petroleum Corp. (NYSE: APC) are now battling over the extent, if any, of the non-operating partner’s share of the damages resulting from the oil well that is now leaking at least 40,000 b/d into the Gulf of Mexico. Anadarko owns a 25% non-operating share in the well, and Japan’s Mitsui & Co. Ltd. owns a 10% non-operating share. Transocean Ltd. (NYSE: RIG) owned the semi-submersible rig that exploded and ultimately sank, but it had no stake in the well’s production.

On Friday, Anadarko issued a statement that accused BP of gross negligence in the British company’s operation of the rig and the well. BP responded this morning saying that all the partners shared in the “costs of operations, including the cost to clean up any spill resulting from drilling.” BP also noted that Anadarko and Mitsui had indicated to the US government that that shared in the liability for the cleanup costs. (Related Article: Buy BP stock With a Target of $37)

Last week BP agreed to set up a $20 billion fund to pay cleanup costs and to compensate victims of the leaking well. To date the company said it has spent $2 billion to pay for damages, including more than 32,000 payments amounting to about $105 million from more than 65,000 filed claims.

The $20 billion fund apparently does not include payments to workers and businesses affected by the six-month drilling moratorium ordered by the Obama administration, according to The Wall Street Journal. The company did say it would pay up to $100 million for Gulf workers not able to work due to the moratorium. Direct wages for idled rig workers could be as much as $330 million a month, and that does not include the impact on service businesses that have contracts with drillers.

BP also managed to avoid a demand that it pay to restore the Gulf shoreline to a better condition than before the blow-out. President Obama has committed to such a restoration, but if that’s the case, the government has apparently agreed to do the work without any funding from BP.

Given the scope of the disaster and the potential costs, which could far exceed BP’s $20 billion commitment, it only makes sense that the company should seek help from its partners. But one of those partners does not intend to go down without a fight.

BP shares are trading down more than 2% this morning. That may be partly due to an announcement by the Brazilian government that it is taking its time to consider BP’s proposed $7 billion acquisition of the offshore Brazil assets of Devon Energy Corp. (NYSE: DVN). The government is not so much concerned with BP’s ability to pay as with the company’s drilling practices. Brazil surely does not want a similar incident that could foul its Copacabana beach.

Anadarko shares are up more than 3%, after opening below Friday’s closing price. Friday’s downgrade of the company’s debt by Moody’s put pressure on the shares at opening.

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Article printed from InvestorPlace Media, https://investorplace.com/2010/06/bp-plc-stock-crude-oil-spill-gulf-of-mexico-blame-transocean-rig-anadarko-apc/.

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