Will Deepwater claims sink BP?
Oil giant BP is struggling to contain the soaring costs of paying compensation for 2010's Deepwater oil spill in the Gulf of Mexico.
Oil giant BP is struggling to contain the soaring costs of compensating businesses and individuals for the Deepwater oil spill it caused in the Gulf of Mexico in 2010. It is taking legal action against the administrator of the compensation fund in order to recover some of the money, insisting that the fund's payout formula has been misinterpreted.
The fund will remain open for claims until next April. A judge will hear BP's case on 8 July. BP has claimed that it could be "irreparably harmed" by spiralling payouts and there are fears that the dividend could be at risk. BP has set aside a total of $42.2bn in its accounts to cover the costs of the spill.
What the commentators said
The case hinges on how to interpret the term "business economic loss", said Andrew Callus on Reuters.com. A key trigger for a claim in this context is being able to demonstrate lower revenues or higher expenses or both during or after the oil spill, compared to other periods. "Proof of a connection with the spill itself is not necessary in most cases."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
But if the terms of the settlement "are so wide you could sail a shrimping boat through them", it's BP's fault, said Guthrie. It forgot the golden rule of litigation: "causation is key". Remove that test and a claim is much more likely to succeed. It looks as though BP "signed up to an overgenerous settlement in the self-abasement of remorse". Indeed, it did, said Seekingalpha.com, and it also neglected to "put a cap on it". Now it is trying to "correct its costly mistake".
-
FTSE 100 hits record highs – why is it rising and will we see more gains?
Advice UK equities have been described as unloved for a long time but as the FTSE 100 hits new highs, we explain if now is the time to buy British.
By Marc Shoffman Published
-
How to invest in copper
It may be time to invest in copper as the red metal appears poised for a big jump. Dominic Frisby looks at what should investors should buy
By Dominic Frisby Published