BP Plc. was accused of the largest oil spill that took place in 2010 in Gulf of Mexico. The oil spill killed eleven workers and caused considerable damage to the environment. US Federal judge Carl Barbier believed the company showed gross negligence and along with federal government decided to penalize the company of $4,300 per barrel. However, the company debated that a maximum penalty of $3000 should be enforced and it also denied the judge accusation of company showing gross negligence. Judge Barbier is yet to announce the final penalty amount imposed on BP.
As per the estimation by Federal government, the company spilled nearly $4.2 million barrels oil which makes it around $18 billion penalty amount. Judge Barbier contended that the estimation of federal government is not correct, as 3.19 million barrels of oil were spilled. However, BP claims that only 2.45 million barrels were spilled.
BP has been surrounded by different problems. With crude oil prices declined by 50% from last six months making exploration process more complicated for the company. BP stake in Russian Rosneft Oil Company has been negatively affected following by the sanctions imposed on Russia by West. BP has already announced its labor cut and capital spending to deal with the low price situation, if the penalty of $13.7 billion is enforced on the company than it is expected to face some serious liquidity issues.
One of the issues which the company has brought up at various occasions is related to the work and amount it has spent to deal with the effect of the Oil spill. BP has spent almost $42 billion to pay fines, cleaning cost and to pay the victims.
The investigation has completed its two phase and it seems like BP will do its best to make the penalty reduced in any way. Since the Oil spill takes place in 2010, company stocks have declined by more than 24%.
On market close on Tuesday February 24th, company stock was up by 0.90% and was trading at 41.59.
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