U.S. Charges BP with Gross Negligence (BP, RIG)
Sep 5th 2012 7:37AM
The explosion and sinking of the Deepwater Horizon in April 2010 killed 11 workers and spilled millions of barrels of crude oil into the Gulf of Mexico. BP PLC (NYSE: BP) has spent billions of dollars on the cleanup and on damage claims, but the worst may not yet be over for the company.
The U.S. Department of Justice yesterday filed a statement with the New Orleans court that is hearing the civil case against the company claiming that BP's actions were grossly negligent and implying that the Justice Department will seek the maximum penalties from the company. The Justice Department also accuses Transocean Ltd. (NYSE: RIG) of gross negligence.
The court filing accuses BP of maintaining a "culture of corporate recklessness," presenting a string of email exchanges as evidence, according to the Financial Times:
The behaviour, words and actions of these BP executives would not be tolerated in a middling size company manufacturing dry goods for sale in a suburban mall.
Yet they were condoned in a corporation engaged in an activity [deepwater drilling] that no less a witness than Tony Hayward [former BP chief executive] himself described as comparable to exploring outer space.
At stake in the trial are triple damages for BP if the Justice Department can prove negligence. That amounts to about $21 billion, depending on how much oil was actually spilled as a result of the blowout. BP had sought court approval of a settlement that will cost the company $7.8 billion. The Justice Department is not seeking to kill the settlement, but it does not want the ruling to set a limit on BP's liability for the spill and its damage. BP, according to the article, had been seeking a resolution of damages from the spill worth about $15 billion.
Transocean came in for its share of opprobrium as well. The Justice Department filing accuses the rig owner of having "stunningly, blindingly botched" a test of whether or not the well had been correctly sealed.
Shares of BP are down about 4% this morning, at $39.97 in a 52-week range of $33.62 to $48.34.
Transocean's shares are down nearly 2.5% at $47.00 in a 52-week range of $38.21 to $60.09.
Filed under: 24/7 Wall St. Wire, Law, Oil & Gas Tagged: BP, RIG