The BP oil spill settlement finally has a price: It will cost the energy giant $4.5 billion, the largest fines ever levied against a corporation by the U.S. government.
BP plc (NYSE ADR: BP) accepted criminal responsibility today (Wednesday) for the 2010 Deepwater Horizon oil rig explosion in the Gulf of Mexico. BP plead guilty to 14 criminal counts, including manslaughter.
A $4 billion chunk of the pay will go toward settlement with the U.S. Justice Department and paid over five years, mostly to environmental agencies. Another $525 million will be paid over three years toward claims with the U.S. Securities and Exchange Commission (SEC) regarding trading in BP shares following the accident.
"This marks both the single largest criminal fine - more than $1.25 billion - and the single largest total criminal resolution... in the history of the United States," U.S. Attorney General Eric Holder said during the announcement in New Orleans. "I hope this sends a clear message to those who would engage in this wanton misconduct that there will be a penalty paid."
Holder announced a separate 23-count criminal indictment against two BP drilling supervisors.
"In the face of glaring red flags indicating that the well was not secure, both men allegedly failed to take appropriate action to prevent the blowout," Assistant Attorney General Lanny A. Breuer, head of the criminal division, said today.
Holder also announced an indictment against BP vice president David Rainey for hiding information from Congress and lying to law enforcement officials.
BP shares have been trading higher in New York following news of the BP oil spill settlement, but lost some gains in the afternoon.
Although Wall Street analysts were encouraged by the deal, it doesn't erase total uncertainty surrounding BP's costs.
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Money Morning Mailbag: U.S. Drilling Ban Could Be Permanent for BP
The U.S. government's deepwater oil drilling ban, which resulted from the BP PLC (NYSE ADR: BP) Gulf oil spill, prompted some readers to question how far U.S. authority reaches regarding offshore business, and what kind of international repercussions could result.
Q: Where do international waters begin for the Gulf of Mexico? I read somewhere if we didn't drill for oil in the Gulf that China was going to do so. When you are talking international business, does U.S. President Barack Obama have the authority to shut it all down?
Q: Where do international waters begin for the Gulf of Mexico? I read somewhere if we didn't drill for oil in the Gulf that China was going to do so. When you are talking international business, does U.S. President Barack Obama have the authority to shut it all down?
- John M.
Marcellus Explosion-BP Spill: Both Involved This Faulty $7 Piece of Plastic
Sometimes the very smallest part of a complicated piece of equipment can bring down the entire project. The part at issue here, a thin ring of rubberized plastic, costs about $7. Yet it may be responsible for forcing the U.S. to rethink its entire domestic energy strategy. Here's what happened. Clearfield County is a rural […]
Marcellus Explosion-BP Spill: Both Involved This Faulty $7 Piece of Plastic
Sometimes the very smallest part of a complicated piece of equipment can bring down the entire project. The part at issue here, a thin ring of rubberized plastic, costs about $7. Yet it may be responsible for forcing the U.S. to rethink its entire domestic energy strategy. Here's what happened. Clearfield County is a rural […]
Free Report: Prepare for Washington's "Heavy Hand," Thanks to BP
BP (NYSE: BP) has guaranteed that the drilling environment in the U.S. will undergo significant change. There will be government overreaction, but leaving the production of new crude oil to the whims of company bottom lines is no longer an option. Some of what is coming will require intense ongoing negotiations. That the increasingly heavy […]
Oil Sector Expert Kent Moors Sees Tough Times, Stricter Regs For BP After Oil Spill
Energy expert Dr. Kent Moors is angry. And the main target for that anger is BP PLC (NYSE ADR: BP).
At its core, the Deepwater Horizon explosion and oil spill is a human tragedy: 11 workers were killed, others were injured and now many Gulf Coast residents will end up losing their homes and livelihoods.
But that's not all that has Dr. Moors seeing red: The accident that resulted from BP's incomprehensible risk-taking has killed an energy bill that could have set the U.S. economy on a course for energy freedom, and is going to summon the heavy hand of government in a way that will cost American consumers dearly while also keeping regular U.S. investors from reaping green.
At its core, the Deepwater Horizon explosion and oil spill is a human tragedy: 11 workers were killed, others were injured and now many Gulf Coast residents will end up losing their homes and livelihoods.
But that's not all that has Dr. Moors seeing red: The accident that resulted from BP's incomprehensible risk-taking has killed an energy bill that could have set the U.S. economy on a course for energy freedom, and is going to summon the heavy hand of government in a way that will cost American consumers dearly while also keeping regular U.S. investors from reaping green.
Two Energy Stocks For a Post-Oil-Spill World
With the failure of the BP PLC (NYSE ADR: BP) "top kill" strategy, the Deepwater Horizon oil spill takes on a more serious hue, both for the Gulf of Mexico environment and for BP itself. If it indeed proves impossible to cap the oil flow before August, public anger against BP and against deep-sea drilling in general may put BP out of business and set deep-sea drilling around the United States back for years.
The business fallout from the oil spill could be widespread. As was true of the Three Mile Island nuclear accident of 1979, the Deepwater Horizon oil spill could end up causing massive damage to companies that were in no way involved with the BP tragedy. Risks of different types of operation will be reassessed, new rules will be enacted, and the energy business will change radically.
Smart investors will anticipate these changes.
The business fallout from the oil spill could be widespread. As was true of the Three Mile Island nuclear accident of 1979, the Deepwater Horizon oil spill could end up causing massive damage to companies that were in no way involved with the BP tragedy. Risks of different types of operation will be reassessed, new rules will be enacted, and the energy business will change radically.
Smart investors will anticipate these changes.
To discover two stocks poised to thrive in a post-oil-spill world, please read on...
BP's Sharp Stock Drop Prompts Takeover Rumors as Gulf Oil Spill Disaster Spirals Out of Control
BP PLC's (NYSE ADR: BP) share price has plunged by more than one-third, as the company has struggled to contain the Gulf oil spill. Now, the company is being rumored as a takeover target as its stock has yet to find a floor.
BP shares have tumbled 36% since the company's leased drilling rig Deepwater Horizon exploded on April 20. The company has lost a third of its market value - $75 billion - stirring rumors that there could be acquisition interest. About $17 billion in losses came on Tuesday alone when the stock plunged 15%.
"There is a 10% to 20% chance of BP being taken over," Gudmund Halle Isfeldt, an analyst at DnB NOR ASA, told Bloomberg News. "The only real candidate, in size and with similar operations globally, would be Royal Dutch Shell [PLC (NYSE ADR: RDS.A, RDS.B)]."
BP's drastic market value loss could make it cheap enough to attract buyers, but some analysts say the total cost and implications of the spill are too vague to justify a commitment.
BP shares have tumbled 36% since the company's leased drilling rig Deepwater Horizon exploded on April 20. The company has lost a third of its market value - $75 billion - stirring rumors that there could be acquisition interest. About $17 billion in losses came on Tuesday alone when the stock plunged 15%.
"There is a 10% to 20% chance of BP being taken over," Gudmund Halle Isfeldt, an analyst at DnB NOR ASA, told Bloomberg News. "The only real candidate, in size and with similar operations globally, would be Royal Dutch Shell [PLC (NYSE ADR: RDS.A, RDS.B)]."
BP's drastic market value loss could make it cheap enough to attract buyers, but some analysts say the total cost and implications of the spill are too vague to justify a commitment.