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The partners with BP in the Deepwater Horizon enterprise are getting their legal ducks in a row this week, in preparation for "The Trials" scheduled to begin this coming Monday in New Orleans.
As the operator of the well, BP/PLC may reach a settlement for the disaster after Mitsui and Co. agreed on fines. Mitsui & Co. as MOEX Offshore will pay $90 million to the U.S. and five states to settle pollution violations. BP will probably have to accept different terms as operator, but the initial settlement has BP paying $585 million for violations, which is less than 20 percent of what the company has provisioned, said Fadel Gheit, an analyst at Oppenheimer in New York. BP had a 65 percent interest in the Macondo well, MOEX had 10 percent and Anadarko Petroleum Corp. (APC) had a 25 percent stake. The settlement suggests that Anadarko will be liable for about $225 million in Clean Water Act fines if the terms are the same, Gheit said.
“This is only the civil part and does not include possible criminal charges and penalties,” Gheit said in an e-mailed response to questions. “The trials will begin later this month and all parties are eager to settle before then. So there could be very important decisions this week.”
BP shares remain 26 percent below their level in London before the spill and the company has claimed about $40 billion in charges to cover the costs of litigation and cleanup. Chief Executive Officer Bob Dudley said Feb. 7 that the company would like to reach a settlement if the terms are right.
The MOEX settlement doesn’t affect claims against or potential recoveries from other companies over the spill, the U.S. Justice Department said Feb 17. MOEX, a unit of Tokyo-based Mitsui, no longer owns a share of the lease.
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“We can’t really read across anything with certainty,” said Jason Kenney, an analyst at Banco Santander SA (SAN) in Edinburgh. “But this implies that a settlement is possible and perhaps more likely for others, too.”
The settlement is the first of what may be a series of agreements with the U.S. as lawsuits over the 2010 spill approach a trial set for Feb. 27. The U.S. Justice Department sued MOEX, BP, Anadarko and Transocean Ltd. (RIG), which owned the rig that exploded, in December 2010, seeking fines for each barrel of oil discharged.
U.S. District Judge Carl Barbier in New Orleans, who’s overseeing much of the spill litigation, has scheduled a non- jury trial to determine liability and apportion fault for the disaster.
A U.S. motion to hold BP, Anadarko and Transocean liable by law for Clean Water Act violations is pending before Barbier. A ruling against the defendants would allow the U.S. to seek fines against each company of as much as $1,100 per barrel of oil spilled, without having to prove the issue of liability at trial.
The Clean Water Act also allows the government to seek fines of as much as $4,300 for each spilled barrel on a finding of gross negligence. The government estimates that 4.1 million barrels were spilled before the well was capped, putting BP at risk of fines of as much as $17.6 billion.
But a total settlement is seen as very unlikely...
BP seen unlikely to settle spill case before trial.
BP believes it is highly unlikely to settle the tangle of litigation related to the Deepwater Horizon explosion before a trial scheduled to start Feb. 27, according to analysts who met with CEO Bob Dudley and other BP executives earlier this week.
“What BP has said is that they would love to settle, but it has to be on favorable terms,” said Pavel Molchanov, an analyst with Raymond James.
The non-jury trial before U.S. District Judge Carl Barbier of New Orleans incorporates civil suits involving scores of individual, corporate and government parties.
Don’t hold your breath for an over-arching settlement,” Molchanov wrote in an analyst’s note summarizing the presentations BP executives made to investors. “The management’s view is that an over-arching “global” settlement is looking highly unlikely.”
In a conference call earlier this month to discuss quarterly financial reports, Dudley said the company is “ready to settle, if we can do so on fair and reasonable terms,” but is preparing for trial.
The company had no further comment this week on a possible settlement strategy or timeline, BP spokeswoman Ellen Moskowitz said.
BP management also believes that the $37 billion that it has set aside as a provision for all liability-related costs is more than will be needed to settle the case, Molchanov wrote. BP declined to comment on the provision.
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