BP and Transocean shares shrug off oil spill report

 
City A.M. Reporter
SHARES in BP and Transocean have risen in trading despite the publication of the US Presidential panel report that spreads the blame for the country's worst-ever oil spill.

Investors are betting that the companies will avoid a highly costly gross negligence charge in spite of the report's findings.

BP's London-listed shares were up one per cent to 504 pence in trading this afternoon, while Transocean's US-listed shares were up 1.8 per cent at $74.57 (47.9p).

The STOXX 600 European oil and gas sector index was up 1 per cent, on higher oil prices.

The report blamed the rig blast and subsequent spill on bad decision-making by BP, drilling contractor Transocean and well cementer Halliburton, which it said highlighted bad industry practice and regulatory shortcomings.

Halliburton shares traded down 1.4 per cent at $38.86 after the report accused the company of using an unproven cement mix to seal the well, which subsequently blew out.

The company denied the accusation.

Investors and analysts said the fact that the blame for the blowout was shared so widely suggested BP and Transocean were less likely to be pinned with a allegation of gross negligence.

Under US law, BP faces fines of $5bn because the spill happened on its exploration block.

However, the fines could rise above $21bn if Europe's second-largest oil company by market value was found to have been grossly negligent in the run-up to the blast.

Peter Hitchens, oil analyst at Panmure Gordon, said comments made in the report that the management failure which caused the explosion on the Deepwater Horizon rig reflected industry-wide flaws, also made BP appear less culpable.

And while the report was damning, Richard Griffith, analyst at Evolution Securities said it could also mean BP can offload some of the costs of cleaning up the spill onto its contractors.

"The report may provide grounds for BP to claw back monies from licence partners and possibly Transocean and Halliburton," he said in a research note.

BP shares have gained over 60 per cent since falling below 300 pence at the height of the crisis in June last year.