Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

BP pares losses on Gulf of Mexico court ruling

BP pares losses on Gulf of Mexico court ruling

Shares in BP (BP) have risen to the top of the FTSE 100 as the oil giant pared heavy losses suffered yesterday after a US judge ruled it was 'reckless' in its handling of the Gulf of Mexico oil spill.

Shares have jumped 1.9% to 463.9p, paring some of yesterday's 5.9% drop on the ruling, which could leave the company facing hefty fines on top of the $42 billion it has already set aside following the disaster.

New Orleans judge Carl Barbier ruled BP was mostly at fault for the spill and that two other companies in the case, contractors Transocean and Halliburton, were less to blame.

Barbier has not yet ruled on damages. However, calculations by Reuters have shown the company could face costs amounting to $18 billion. BP said it would appeal the ruling.

Analysts at Liberum said yesterday's share price falls appeared too heavy. 'The share price fell by 29p on the news. This may look overdone given a maximum fine estimated at $18 billion (ie 58p, or 47p excluding $3.5 billion already provisioned) which may be reduced by several factors and that the market has already discounted some level of penalty,' they said.

Jefferies analysts meanwhile said BP's dividend was unlikely to be put at risk due to the news. 'Even in the event of a maximum fine, we believe that BP has sufficient liquidity to meet its obligations,' they said.

'We expect a worst case scenario of fine level would not be paid in the near term; we would expect a lengthy appeal process first. We thus do not believe there is a risk to the current BP dividend.'

The FTSE 100 was trading 27 points, or 0.4% lower, at 6,849. After steadily falling during the day, the bulls briefly held the ascendancy in the afternoon's trading as the US reported jobs figures that were much worse than expected, weakening the case for an interest rate rise.

The US Department of Labor reported that just 142,000 jobs were added in August, way below the 225,000 investors had been expecting.

'A disappointing employment report for August gives US policymakers more food for thought about when the economy might be capable of withstanding higher interest rates,' said Chris Williamson, chief economist at Markit. 'The slowdown in hiring certainly vindicates the Fed's cautious approach to tightening policy.'

Miners were among the biggest fallers on the FTSE 100 as they were hit by a drop in the gold price, hovering near three-month lows at $1,264 an ounce. Randgold Resources (RRS) fell 3.2% to £47.84, Fresnillo (FRES) shed 3.8% to trade at 874.5p, Rio Tinto (RIO) dropped 1% to £32.10 while BHP Billiton (BLT) dipped 0.9% to £18.87. 

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Brewin's Gutteridge: Yuan direction

Brewin's Gutteridge: Yuan direction

This week Brewin Dolphin's research head chats to Fidelity Asian Investment Directors Jenny Lee and Gary Monaghan about the big changes in China.

Play On the Road Challenge: horsing around on the polo pitch

On the Road Challenge: horsing around on the polo pitch

Libby Ashby takes to the polo pitch with Stuart Leigh-Davies from Redmayne-Bentley for an 'On the Road' challenge.

Brewin's Gutteridge: where Miton's Godber sees value

Brewin's Gutteridge: where Miton's Godber sees value

This week Brewin Dolphin's research head talks to George Godber, co-lead fund manager of the Miton UK Value Opportunities fund, about value investing.

Your Business: Cover Star Club

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Rathbones’ Glasgow office has only been open for three months but the team, led by Angus Kerr, has already attracted new clients

Wealth Manager on Twitter