Shares of BP plc (ADR) (NYSE:BP) fell sharply lower this morning shortly after the news broke that the company had been found grossly negligent in the 2010 Deepwater Horizon oil spill. U.S. District Judge Carl Barbier handed down the ruling in New Orleans today, and as Bloomberg reported, the ramifications are huge for BP plc (ADR) (NYSE:BP) and its shareholders.
“This is actually an enormous deal. Gross negligence means the company acted with willful or wanton misconduct, or reckless indifference. And what that winds up meaning for bottom line for BP is depending on how the judge rules and how big the spill was, the fines could reach up to $4,300 per barrel that was released,” Bloomberg’s Alix Steel said.
BP plc (ADR) (NYSE:BP) could now be liable for as much as $18 billion in fines, a figure far greater than had been anticipated. The potential fine for a ruling of negligence would have been just $1,100 per barrel, less than $5 billion maximum. There is still some dispute over exactly how many barrels were spilled, with BP plc (ADR) (NYSE:BP) claiming 2.45 million and U.S government experts estimating 4.2 million.
BP plc (ADR) (NYSE:BP)’s shares have fallen 5% in trading today, to just over $45 as a result of the ruling, their lowest level since October, 2013. By contrast, both Halliburton Company (NYSE:HAL) and Transocean LTD (NYSE:RIG) were only found negligent for their role in the disaster. Both company’s shares rose initially on the news, though they have since retreated to small losses for the day. Halliburton was subcontractor which cemented over the wells, while Transocean was the owner of the Deepwater rig.
It’s likely BP plc (ADR) (NYSE:BP) will contest the gross negligence ruling. BP has already paid out billions of dollars in settlements and fines to the U.S government and affected parties.