Sun Suddenly Shining For BP?

Todd Shriber
 
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The analogies and metaphors that can be applied with regards to BP using what appears to be an interpretation of a sun as its logo are plentiful, but the bottom line is this: Sixteen months removed from the largest oil spill in U.S. history, an event that there is no getting around that BP will share ample blame in, things are looking up for Europe's second-largest oil company.

Certainly, it is far too early to proclaim BP (BP) as out of the woods. With a massive round of litigation that combines thousands of lawsuits still to come next year and BP's ultimate financial liability for the spill still not yet known, it might be fair to say the British oil giant is in the middle of the woods, but it looks the company is at least trying to make a return to normalcy.

For the most part, the BP's July news flow has been decent. Earlier this month, Standard & Poor's revised its credit rating outlook on BP to ''stable'' from ''negative,'' citing the company's asset sales program as catalyst behind being able to cope with spill liabilities. Moody's Investors Service made the same revision to BP's outlook in April.

In May, BP was able to extract a $1 billion settlement out of Japan's Mitsui, the company's whose Moex unit held a 10% non-operating interest in the Macondo well project. That feat is made no less impressive by the fact that the Japanese company was initially reticent about any payment to BP. And last month, BP was able to cajole $75 million out of oil services provider Weatherford International (WFT). Pennies for a company of BP's size to be sure, but hey, every little bit helps.

If those headlines are to be considered good news for BP, then the good news did not end there. BP has been able to score two significant legal victories in July. U.S. District Judge Carl Barbier granted a BP motion to dismiss a spill complaint brought against the company under U.S. RICO statutes. A RICO charge is provocative in its own right and had BP lost the challenge and eventually the RICO case, that would have been quite damning.

Barbier also ruled that Anadarko Petroleum (APC), which held a 25% non-operating interest in Macondo, must go through arbitration with BP before litigation becomes an option. That is pursuant to the contract between the two companies, but keep its rift with Anadarko out of a courtroom trial favors BP. Plus, Anadarko has shown some willingness to at least talk with BP about the $1 billion cleanup BP has slapped Anadarko with.

If BP is able to wrangle $1 billion out of Anadarko, BP's shares will likely pop on the news. Speaking of events that could move BP's shares, in a letter to the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) BP has outlined the steps it will take to boost safety standards in a bid to get back to work in the Gulf. This is significant because BP is the largest Gulf leaseholder.

BP is not out of the woods by a long shot, but maybe, just maybe, the sun is starting to shine a little brighter for the embattled oil giant.

Todd Shriber

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