Published on 9th September 2012
Last week, the US Department of Justice (DoJ) talked tough in relation to BP’s Gulf of Mexico oil spill. Any final settlement now looks further away. In a statement during the civil case in a Louisiana court, the DoJ accused BP of gross negligence or wilful misconduct. Credit Suisse has calculated that gross negligence could lead to a maximum fine of 21bn dollar (13.2bn pounds) under the Clean Water Act, compared with BP’s provisions of 3.5bn dollars. This came at a time when Hurricane Isaac uncovered more spilled oil in the Gulf. The sale of BP’s 50 per cent stake in its Russian joint venture TNK-BP is also hitting snags. Coupled with BP’s dire second-quarter results, this means there is a substantial cloud overhanging the company’s prospects. It is undoubtedly undervalued, on a 2012 earnings multiple of 7.5, but these issues mean the rating remains a hold, says the Sunday Telegraph´s Questor team.