BP plc (BP) Seeks a Potential Cut in Oil Spill Fine

Page 1 of 2

BP plc (ADR) (NYSE:BP) is seeking a reduction of the $3.4 billion fine for pollution caused by the Gulf of Mexico oil spill in 2010. According to the company, at least 810,000 barrels of oil were collected before it spilled into the Gulf, and it should be accounted for while calculating the fine in accordance with Clean Water Act penalties. The officials at BP state that the government has overestimated the size of the spill, and therefore the fine calculated by the authorities is also overestimated. BP has submitted a court filing asking the federal government for the amendment. According to estimates, BP is expected to be imposed a fine of around $20 billion.

BP plc (ADR) (NYSE:BP)BP plc (ADR) (NYSE:BP)’s Post-Spill Performance

BP has been on the road to recovery ever since the unfortunate oil spill in the Gulf of Mexico in 2010. The event was of such a massive scale that it cast serious doubts over the survival, let alone prospective growth, of the company. BP’s share price came down from around $60 to $27 in a matter of days, and the company has not reached that high share price ever since. However, BP shows signs of rapid recovery that are reflected in the company’s market and financial performance. In 2010, the company faced an operating loss of $15 billion, and in the very next year it returned an operating profit of $28 billion.

BP has a long way to go until it reaches its prior glory, but there is sufficient evidence that the company is gradually moving towards its previous position. The company has kept its shareholders satisfied with regular dividend payouts which are gradually increasing, and it has also kept the analysts optimistic due to its strong financial performance. For the third quarter in 2012, BP reported an underlying replacement cost profit of $5.2 billion, which was higher when compared to the $3.7 billion reported for the second quarter. BP’s solid financial growth can be attributed to its strong downstream business. The company’s upstream business is also growing at a steady pace, with increased production from new projects. BP has improved earnings per share by 7.6% in the most recent quarter compared to the same quarter in 2011.

The strength of the company can also be evidenced by the pattern of its earnings per share growth over the past two years. In the upcoming year, analysts expect an underperformance with regard to EPS due to the one-off payment of the fine against the oil spill; however, the overall business of the company is expected to grow.

New Upstream Project

BP announced that it has started production from one of its major upstream projects at the Skarv field in the Norwegian Sea. The field is expected to push the overall production of the company, as it will reach around 125,000 barrels of oil equivalent per day (boepd), monthly average rate of 30,000 boepd within the first six months, and 165,000 boepd per day by the year end. This is one of the major projects taken up by the company after the oil spill, and it is expected to help BP speed up the recovery of its business.

This project will also strengthen BP’s position against its competitors. The major competitor of the company is Chevron Corporation (NYSE:CVX). Chevron has had a commendable market performance in the recent past when compared to other firms in the industry. Chevron has been growing at a rapid pace, and the company has reported very positive outlooks for its fourth quarter in 2012. The EPS of Chevron stands at $12.19, which is significantly higher than that of BP at $5.53. In its third quarter in 2012 Chevron’s net profit was $5,253 million, and the company expects an increase in profits in the fourth quarter. Chevron’s performance will not have any significant influence on BP, as BP is gradually gaining back its strength.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Shopaholics Rejoice: The 12 Biggest Malls in the World

Fright Night: 10 Horror Movies Based on True Stories

Mach Mania: The 10 Fastest Jets in the World

Military Heavyweights: The 10 Countries with the Most Tanks

All In: The 7 Richest Poker Players in the World

Abracadabra: The 10 Best Magicians in the World

The 10 Richest Asian Countries in the World in 2014

Eyes in the Sky: 10 Things You Need to Know About Drones

Rising Stars: The 6 Best Silicon Valley Startups

Military Muscle: The 5 Most Advanced Armies in South America

All that Glitters: The 7 Most Luxurious Jewelry Brands in the World

5 Things You Didn’t Know About ISIS but Should

Empowering Your Money: The 5 Best Energy Stocks to Invest In

The 11 Best Android Apps You Can’t Get on iOS

The 10 Most Important International Conflicts in 2014

Mood Enhancers: The 20 Most Uplifting Songs of all Time

Lover Beware: The 8 Countries that Cheat the Most

Breath of Fresh Air: The 25 Countries with the Best Air Quality on the Planet

Singles Beware: The 8 Worst Mistakes Made on First Dates

Healthy and Happy: The 10 Countries with Lowest Healthcare Costs

The 6 Best Company Team Building Activities to Build Workplace Camaraderie

Ships Ahoy: The 10 Busiest Shipping Ports in the World

10 Productivity Tips to Save You Time and Help You Do More With Less

Grab a Bite: The Most Popular Fast Food Restaurants in America

Friday Night Thirst: The 10 Most Popular Cocktails in the World

The 6 Greatest Unsolved Mysteries We May Never Figure Out

7 Useless Products You Never Should’ve Bought

The 5 Reasons Why You’re Single and Miserable

The 7 Most Addictive Foods in the World We Can’t Stop Eating (Even Though We Should)

5 Amazing Places You Can Swim with Dolphins

The Top 7 Most Livable Countries In The World

The 10 Most Expensive Baseball Cards Ever Pulled From A Pack

The 5 Easiest Second Languages to Learn for English Speakers

Silver Spoon: The 6 Richest Families in the World

The 20 Countries with the Largest Prison Populations in the World

The Top 10 Richest Actors in the World

The 10 Best Airline Stocks to Invest In Before They Fly Too High

Burger Kings: The 10 Most Expensive Burgers in the World

The 10 Most Ethnically Diverse Countries in the World

The 10 Most Exclusive Credit Cards in the World

The 10 Most Expensive Cruise Ships in the World

The 10 Fastest Supercomputers in the World

The 10 Best Countries for Doing Business 2015

6 Most Expensive Fruits In The World

10 Worst Airlines in the World

The 10 Biggest Tax Havens in the World to Stash Your Money

The 15 Most Murderous Countries in the World

10 Largest Colleges in the World: Bigger Isn’t Always Better

Comedians in Cars Getting Coffee: The 6 Comedians Seinfeld Needs to Interview

Easy Money: The 10 Most Successful Investors in the World Today

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!