Cleanup Costs and Lawsuits Rattle BP’s Investors
Business Law
BP shareholders are fleeing the company’s stock amid growing uncertainty about the ultimate bill for cleanup costs, lawsuits, fines and damage to the oil giant’s reputation.
BP’s shares fell an additional 15 percent on Tuesday, as investors reacted to news that the latest effort to stem the gushing oil in the Gulf of Mexico failed over the weekend. It is the steepest drop in shares in about two decades.
Also on Tuesday, Attorney General Eric H. Holder Jr. said that federal authorities had opened criminal and civil investigations into the Deepwater Horizon explosion.
Since the Deepwater Horizon drilling rig exploded April 20, the company has lost a third of its market value, or about $75 billion.
The company said Tuesday that it had spent almost $1 billion on cleanup efforts. But that bill is likely to rise as oil continues to spill into the gulf, with no guarantees that any of the new plans to contain the spill will work.
Investors are also grappling with potential damage to the company’s reputation.
“Financially they can survive this crisis, but politically they will be punished for a very long time,” said Fadel Gheit, an oil analyst at Oppenheimer & Company.
The prospect of billions of dollars more in legal payouts and fines is also weighing on the company.
BP officials say they have already paid $36 million to settle claims of economic loss and damage under the Oil Pollution Act, a 1990 law passed in the wake of the Exxon Valdez disaster, and that more than 26,000 claims have been submitted.
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