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

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

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!