BP falls most in four months af­ter US files law­suit

The Pak Banker - - Company& -

WASHINGTON: BP Plc fell the most in al­most four months in London trad­ing af­ter the Obama ad­min­is­tra­tion filed a suit say­ing the com­pany and four oth­ers vi­o­lated en­vi­ron­men­tal laws in the largest U.S. oil spill.

The shares dropped 6.55 pence, or 1.4 per­cent, to 470 pence at 4:35 p.m. lo­cal time, af­ter fall­ing as much as 3.2 per­cent, the most since Aug. 24. BP has de­clined 28 per­cent since the April 20 blowout on the Deep­wa­ter Hori­zon rig that killed 11 work­ers and caused the Ma­condo well to leak crude into the Gulf of Mex­ico un­til July.

BP has set aside $40 bil­lion to pay for cleanup and lit­i­ga­tion from the spill and is pay­ing into a $20 bil­lion es­crow ac­count, de­manded by Obama, to pay claims from in­di­vid­u­als af­fected by the ac­ci­dent. The shares have ral­lied more than 50 per­cent since the June agree­ment with the U.S.

"This raises a bit more un­cer­tainty," said Peter Hitchens, an an­a­lyst at Pan­mure Gor­don & Co. in London. "Peo­ple were get­ting com­fort­able that things had calmed down."

Credit-de­fault swaps on BP rose 20 ba­sis points to 103, ac­cord­ing to data provider CMA. An in­crease in the con­tracts that pro­tect against losses on BP's debt in­di­cates in­vestors are spec­u­lat­ing the risk of de­fault may be higher.

In ad­di­tion to Lon­don­based BP, the owner of the well, de­fen­dants in the law­suit in­clude units of Vernier, Switzer­land-based Transocean Ltd., which owned the rig, and Anadarko Petroleum Corp. and MOEX Off­shore 2007 LLC, part own­ers of the well.

Mit­sui & Co. owns 70 per­cent of Mit­sui Oil Ex­plo­ration Co., which holds 10 per­cent of the field where the Ma­condo well is lo­cated through its U.S. sub­sidiary MOEX Off­shore, ac­cord­ing to the Mit­sui Oil web­site.

Anadarko, based in The Wood­lands, Texas, dropped 8 cents to $67.33 at 4 p.m. in New York Stock Ex­change com­pos­ite trad­ing. Transocean fell $2.58, or 3.6 per­cent, to $69.31, the biggest de­cline since Oct. 19.

The law­suit, filed yes­ter­day in fed­eral court in New Or­leans, is the first brought by the U.S. over the spill. The Jus­tice Depart­ment's civil in­ves­ti­ga­tion is con­tin­u­ing, as well as a probe of po­ten­tial crim­i­nal vi­o­la­tions.

The law­suit seeks dam­ages un­der the Clean Wa­ter Act and a dec­la­ra­tion that four of the de­fen­dants are li­able un­der the Oil Pol­lu­tion Act for all re­moval costs and dam­ages caused by the oil spill, in­clud­ing dam­ages to the en­vi­ron­ment, ac­cord­ing to a Jus­tice Depart­ment state­ment. The law­suit doesn't ask for a spec­i­fied amount of dam­ages.

The Clean Wa­ter Act au­tho­rizes the U.S. to seek civil penal­ties of $1,100 for each bar­rel of oil spilled, or in cer­tain cir­cum­stances, as much as $4,300 a bar­rel from the com­pa­nies in­volved, govern­ment lawyers said in a Septem­ber fil­ing with a court in New Or­leans. The govern­ment re­ported in Au­gust that 4.9 mil­lion bar­rels were spilled.

"We in­tend to prove that these vi­o­la­tions caused or con­trib­uted to this mas­sive oil spill, and that the de­fen­dants are there­fore re­spon­si­ble­un­der the Oil Pol­lu­tion Act-for govern­ment re­moval costs, eco­nomic losses, and en­vi­ron­men­tal dam­ages," At­tor­ney Gen­eral Eric Holder said yes­ter­day at a news con­fer­ence.

"We have not asked for dam­ages at this point be­cause it's go­ing to take years to fully quan­tify what the dam­ages are," Tony West, an as­sis­tant at­tor­ney gen­eral who over­sees the Jus­tice Depart­ment's civil di­vi­sion, said at the press con­fer­ence. The law­suit "is solely a state­ment of the govern­ment's al­le­ga­tions and does not in any man­ner con­sti­tute any find­ing of li­a­bil­ity or any ju­di­cial find­ing that the al­le­ga­tions have merit," said Scott Dean, a BP spokesman.

"Alone among the par­ties, BP has stepped up to pay for the clean-up of the oil, set­ting aside $20 bil­lion to pay all le­git­i­mate claims," Dean said in an e-mail. "We took these steps be­fore any le­gal de­ter­mi­na­tion of re­spon­si­bil­ity and will con­tinue to ful­fill our com­mit­ments in the Gulf as the le­gal process un­folds."

"No drilling con­trac­tor has ever been held li­able for dis­charges from a well un­der the Oil Pol­lu­tion Act of 1990," Guy Cantwell, a Transocean spokesman, said yes­ter­day in an e-mail. "The re­spon­si­bil­ity for hy­dro­car­bons dis­charged from a well lies solely with its owner and op­er­a­tor."

MOEX Off­shore said in an e-mailed state­ment that it is re­view­ing the com­plaint.

"We stand by our state­ment of June 18, that the op­er­a­tor's de­ci­sions and ac­tions on the rig likely amount to gross neg­li­gence and/or will­ful mis­con­duct," John Chris­tiansen, an Anadarko spokesman, said in an e-mail. "We rec­og­nize that we may have obli­ga­tions un­der fed­eral law, and we will con­tinue to look to the op­er­a­tor to pay all le­git­i­mate claims as it has com­mit­ted to do." Other de­fen­dants and claims could be added later, Holder said at the news con­fer­ence. Hal­libur­ton Co., which pro­vided the ce­ment to plug the well, wasn't named as a de­fen­dant in law­suit. -Bloomberg

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