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The bad news for British Petroleum (BP) just keeps on coming. Remember that $20 billion the company set aside for claims arising out of the massive Deepwater Horizon oil spill? They only have $1.7 billion unassigned after Business Economic Losses claims were higher than expected, reports Reuters.
Nearly two billion? That’s quite a bit, isn’t it? The company has also been hit by over 2,200 new lawsuits in the days before April 20, the three-year statute of limitations deadline imposed by the United States Oil Pollution Act of 1990. Meanwhile, they are currently in trial in New Orleans, Louisiana on related claims. According to Reuters, BP is expected to try to consolidate most of the new suits with the ongoing trial.
That trial, by the way, could also be going poorly. The first phase ended earlier in April. The judge, Carl Barbier, has yet to decide two key issues: the apportionment of blame between BP and its drilling partners, Transocean Ltd. and Halliburton Co. and the level of negligence with which the defendants acted. If any acted with gross negligence, that could mean quadruple damages, reports Inside Counsel.
That's all a shame. It couldn't happen to a nicer oil company.
It gets worse.
The City of New York has jumped on the plaintiffs' bandwagon as well. How does a city thousands of miles away claim damage from an environmental disaster in the Gulf of Mexico?
Shareholders, pension funds, and disclosures. According to Reuters UK, the city claims that it incurred more than $39 million in damages resulting from BP's lack of candor to its shareholders regarding the riskiness of its offshore drilling operation and its compounding the damages by "misleadingly attempt[ing] to minimize the extent of the damage and the cost to shareholders."
As bad as all that news sounds, it doesn't seem to be making a difference in the stock prices. The stock dropped 0.1 percent on Friday, which was in line with the overall market. Though the stock dipped to nearly $40 per share, it's rallied since to $43.59 as of Tuesday morning -- the highest it's been all month.
Perhaps this is a good lesson in corporate governance. In true disaster scenarios, paint a pretty picture of the aftermath and let the bad news trickle in slowly.