BP share price little changed as group caps Gulf spill costs

on Jul 15, 2016
Updated: Oct 21, 2019

BP (LON:BP) has moved to draw a line under the Deepwater Horizon disaster, the blue-chip oil group has said. The company has unveiled an additional $5.2-billion pre-tax charge which will take the group’s final bill for the Gulf of Mexico oil spill to $61.6 billion (£46.1 billion).

BP’s share price has been little changed in London this morning, having shed 0.24 percent to 453.55p as of 08:11 BST. The decline is largely in line with losses in the broader market, with the benchmark FTSE 100 index currently standing 0.23 percent in the red at 6,639.25 points. The group’s shares have gained just under six percent over the past year, and are up nearly 28 percent in the year-to-date.

BP announced in a statement yesterday that it could now ‘reliably estimate’ all of its remaining material liabilities in relation to the Deepwater Horizon disaster. The company said that it expected to take an after-tax non-operating charge of around $2.5 billion in its second quarter results, expected to include a pre-tax non-operating charge associated with the oil spill of around $5.2 billion. BP noted that this would take its total cumulative pre-tax charge relating to the spill to $61.6 billion or $44 billion after tax.
The final bill includes a host of settlements with US authorities, including resolving criminal charges and claims under the US Clean Water Act.
“BP believes that any further outstanding Deepwater Horizon-related claims not covered by this additional charge will not have a material impact on the Group’s financial performance,” the oil major said in the statement, adding that it would deal with remaining claims in the ordinary course of business.
In analyst news, HSBC, which has a ‘buy’ rating on BP, set a price target of 505p on the stock this week. Morgan Stanley meanwhile remains ‘overweight’ on the group, without specifying a valuation on the shares. BP will announce its second-quarter results on July 26.
As of 08:34 BST, Friday, 15 July, BP plc share price is 453.40p.