Embattled BP sets eyes on recovery


BP is still facing a lawsuit over the Gulf of Mexico oil spill

BP’s share price may have recovered from the 14-year low seen this summer, but the US Government served up a reminder this month that the company is far from out of the woods following a disastrous year.

The British oil firm was among eight companies named by the US Justice Department in a lawsuit filed in a New Orleans court as the government sets out claims for costs and damages incurred in the Gulf of Mexico oil spill.

The move caused a jolt in the company’s share price recovery, which after falling from a high of 655p in April to a low of 303p in June has benefited from the appointment of new chief executive Bob Dudley and signs that countries such as Russia, China and Brazil are still willing to work with the firm.

There is talk of a return to dividend payments as early as February, a key development for pension holders as well as investors given the stock is thought to account for one in every six pension pounds invested.

But it is clear there is much to do at BP. Along with legal actions and investigations to deal with, the cost of the disaster continues to rise.

In its results in November it revealed the 32.2 billion US dollars (£20.7 billion) it put aside for the disaster earlier in the year was not enough and unveiled a further 7.7 billion US dollar (£5 billion) hit.

And the devastating impact of the disaster – on the environment and communities of the Gulf Coast – will hurt for some time to come.

Richard Hunter, head of UK equities at Hargreaves Lansdown, believes BP’s shares appeal as a “recovery play”.

He said: “Of course, the ultimate costs are still unknown, but both the US and UK governments have noted their desire to see a ‘strong and stable’ company.

“There is still the potential for BP to counter claim on some of the other parties involved in the spill, and a resumption of dividend payments at any point during 2011 would be warmly received.”

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.