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 Click to see monthly returns in table format!

Lists

10 Best States To Practice Medicine

The 10 Best States to Have a Business

The 12 Most Expensive Apple (AAPL) Apps in the Market

The 10 Richest Billionaires in the World

10 Biggest Kickstarter Failures

The 10 Best Places to Work At

The Top 10 of Google Inc (GOOGL)’s Most Expensive Acquisitions

13 Best Cities to Visit in South America

10 Most Expensive Works of Art of All Time

The 10 Richest Banks in the World

The 10 Best-Paying Jobs in America (2014)

7 Most Expensive Foods in the World

The World’s Top 10 Earning Authors

Five Wicked and Very Expensive Items (and Other “Stuff”) Sold on eBay

10 Biggest Celebrity Bankruptcies

The Top 10 Highest Paid CEOs in 2014

The 10 Most Expensive Real Estate Cities in America

10 Most Expensive States To Live In America

The 10 Best Airlines in the World

The 10 Best-Selling Cars in 2014

The 10 Best Industries to Invest In

The 10 Most Expensive States to Own a Car In

Top 10 Business Schools in US: 2014 Rankings

Top 20 Female Billionaires in 2014

6 Movies That You Should Watch to Better Understand The Cold War

Top 15 Best Paying Jobs for Women in 2014

Top 6 Things Rich People Do Differently Every Day

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top 6 Tax Scams and How to Protect Yourself

Top Businesses to Invest In

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!