BP sees stock slide as spill costs mount

BP’S SHARES took a nosedive yesterday on news that the oil major’s partner in the Gulf of Mexico, Anadarko Petroleum, is refusing to pay out claims related to the spill while total costs have already pushed past £1bn.

The group’s shares tanked in London trading, falling by more than 11 per cent to 338.24p, before recovering to close 2.2 per cent down at 349.50p.

Stock markets responded to news that Deepwater Horizon partner Anadarko is refusing to foot any bills coming from the Gulf leak after calling BP’s involvement in the drilling of the Macondo well as “reckless”.

BP hit out at Anadarko and said that other parties besides itself were responsible for costs and liabilities linked to the spill.

Chief executive Tony Hayward said: “But how the costs and liabilities are eventually allocated between various parties will not affect our pledge… to clean up the spill and pay all legitimate claims in an efficient and fair manner.”

The group’s market cap has already fallen to £67.3bn, compared to over £122bn before the rig exploded in April, as investors react to news that costs of the oil disaster continue to soar.

Yesterday the group said the clean up costs reached $2bn (£1.35bn) at the same time paying out $105m in claims. The group has collected 103,000 barrels of oil leaking from the well and said that it was ahead of schedule to drill the relief wells.

The oil group came under further fire yesterday as former rig worker Tyrone Benton claimed that he had spotted a leak in the blowout preventer prior to the explosion. He says managers ignored his concerns.

Partners point the finger

WITH the vilification of BP continuing apace, you could be forgiven for thinking the oil major owns the Macondo well outright. But Japan’s Mistui has a 10 per cent interest and America’s Anadarko owns a quarter. It was only a matter of time before the trio turned on one another, but things have turned particularly nasty.

Last week, Anadarko launched a staggering attack on BP: it said the tragedy was “preventable”; it blamed BP’s “reckless decisions and actions”; it said BP “operated unsafely and failed to monitor and react to critical warning signs”; and it suggests these “actions likely represent gross negligence or wilful misconduct”. According to Anadarko, this affects “the obligations of the parties under the operating agreement”. In short, blame BP – it wasn’t us guv, honest. Unsurprisingly, BP disagrees.

Anadarko is coming out fighting because it has no choice: compared to BP it is tiny, with a market cap of $22bn; a $3.7bn cash pile; and $11bn of long term debt. If the spill costs anything near the $20bn BP has set aside, then Anadarko would struggle to pay its $5bn share. It serves as a reminder BP is nowhere near the end of this. It is not even near the beginning of the end.