London-based BP is nearing the third anniversary of its Macondo Gulf of Mexico well disaster, almost certainly the most horrendous incident in U.S. oil and gas history. Increasingly, the key question surrounding the company involves the extent to which it’s recovered from the tragedy and recaptured a role among the desirable additions to energy investment portfolios.

You’ll recall that on the night of April 20, 2010, Transocean‘s Deepwater Horizon rig exploded, burned, and sank, snuffing out the lives of 11 hands who’d been working aboard the deepwater unit. During the next four months, while the world watched in horror, the damaged well spewed a whopping 4.9 million barrels of crude oil into Gulf waters.

The first of a big chunk
While the oil was still gushing uncontrollably from the well, BP established a $20 billion trust fund for victims of the incident. Thus far, however, the company’s payments and commitments have rocketed to about $40 billion.

But that may be far from the ultimate tab. A now six-weeks-long non-jury trial is being conducted in the New Orleans court of U.S. District Judge Carl Barbier to determine the degree of fault attributable to BP and its contractors. That group includes Transocean and Halliburton , which was in charge of cementing the well.

Should Barbier find BP to have been guilty of “gross negligence” in precipitating the disaster, the company could be required to ante up another $18 billion in penalties related to the Clean Water Act. Further, affected Gulf states, led by Louisiana, are awaiting their turn in court to press what they believe could amount to a combined $34 billion for damages and lost tax revenue. The company’s assessment of the validity of the latter claims is, however, best indicated by an absence of reserves against charges for missed tax revenues.

Steady progress
Much of the public’s exposure to BP has been negative for most of the past decade, beginning with a 2005 refinery explosion at its Texas City, Texas, refinery that killed 15 and injured dozens. Nevertheless, the company continues to make operating strides in a variety of locations. Included was the sale of the snake-bitten Texas refinery last quarter to Marathon Petroleum .

And despite the lingering negatives from Macondo, the company expects to spend about $40 billion during the next decade in the Gulf of Mexico, where it remains a leading producer. Indeed, it operates seven facilities in the Gulf, including the giant Mad Dog and Thunder Horse fields. It also has equity interests in another five plays. It operates the Mardi Gras transportation system of five major oil and gas pipelines that serve fields in the prolific Mississippi Canyon and Southern Green Canyon areas.

Created as the Anglo-Persian Oil Company in 1909, BP continues to be active in the Middle East. It’s overseeing the successful remediation of Iraq‘s massive Rumaila field, is involved in joint ventures with …read more
Source: FULL ARTICLE at DailyFinance