BP shares have moved sharply higher following another settlement relating to the Gulf of Mexico disaster.
It has reached a deal with Anadarko, a 25% partner in the Macondo well which caused the disastrous oil spill, on clean up costs. Anadarko will pay BP $4bn and will no longer pursue claims of gross negligence against the UK oil major. The deal excludes any government fines which may still have to be paid. BP has said the total bill for the spill could be $42bn, and it has already reached a $1.1bn settlement with another partner, Mitsui & Co, and also Weatherford, which provided drilling equipment for the Deepwater Horizon.
BP will put the money from Anadarko into the $20bn fund it established to meet individual, business and government claims relating to the spill.
BP is currently the biggest riser in the FTSE 100, up 21.6p to 438p or more than 5%. Andrew Whittock at Liberum Capital said:
Until now [Anadarko] had refused to accept any liability for costs. The settlement represents a positive resolution of a significant uncertainty for BP. Only Transocean and Halliburton are still holding out. At 416p BP stands on only 5.7 times consensus 2012 earnings per share (Shell is on 7.6 times).. and yields 4.3%. Almost any sum of the parts valuation would get to at least 450p. BP clearly suffers from greater uncertainty at present and the biggest fundamental negative (for us) is that Shell yields 4.9% - given that BP and Shell should have similar long term prospects, the yields should converge.
Meanwhile Amec has added 29p to 890p after BP, Shell, ConocoPhillips and Chevron appointed the company to deliver project management services for the Clair Ridge project west of Shetland.
Source: http://www.guardian.co.uk/business/marketforceslive/2011/oct/17/bp-new-gulf-settlement
Paul Myners Local government Manchester City Radio 4 Science fiction Waste
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