BP has struck a deal to receive around $1 billion from one of its minority partners in the blown-out Gulf of Mexico well, raising hopes it will successfully pursue other companies involved and reduce its bill for the disaster.
BP PLC said Thursday that MOEX Offshore 2007 LLC, which had a 10 percent interest in the Macondo well, has agreed to pay $1.065 billion to settle all claims between the companies over the accident on the Deepwater Horizon rig.
Under the settlement, MOEX, a unit of Japanese trading house Mitsui & Co., agreed to recognize findings by the U.S. Presidential Commission that the accident "was the result of a number of separate risk factors, oversights and outright mistakes by multiple parties and a number of causes."
It also recognized findings from the U.S. Coast Guard that "the safety management systems of both Transocean and its Deepwater Horizon rig had significant deficiencies that rendered them ineffective in preventing the accident."
Shares in BP closed 2.7 percent higher at 460 pence ($7.50) after analysts said the deal puts pressure on BP's other minority partner, Anadarko, to reach a similar deal and leaves rig operator Transocean open to a combined assault for compensation.
Evolution Securities analyst Richard Griffith said success on those fronts would reduce his estimate of BP's total liabilities, which currently stands at $25-30 billion.
"Critically Mitsui has joined BP in recognising that the accident was the consequence of a number of risks and actions by multiple parties," said Griffith. "Perhaps more significantly is the broader recognition that Transocean's safety management systems on the rig were deficient and where this could lead BP and its licence partners to pursue Transocean for compensation thus reducing the overall size of the liability net to BP."
Jonathan Jackson, head of equities at Killik & Co., said he was "slightly disappointed" by the size of the settlement, but the news was positive.
"It is the first time that a company involved in the well has joined BP in helping to meet the cost of the accident and it appears to reinforce the likelihood that BP will not be found grossly negligent, an outcome that would bring a much larger liability under the Clean Water Act," Jackson said.
He added that BP might reach a global settlement that rolls up into a single deal the liability for fines, damages and other penalties.
BP said Friday that it would continue to pursue Texas-based Anadarko, which had a 25 percent interest in the well, Switzerland-based Transocean and cement contractor Halliburton to pay their share of billions of dollars in cleanup costs, oil-spill damages and pollution fines.
MOEX has also filed cross-claims against Transocean and Halliburton, which BP noted Friday "designed and pumped the unstable cement that the Presidential Commission found was a key cause of the accident."
However, Transocean said the Deepwater Horizon rig was in "sound working condition" and had passed inspections by the Coast Guard.
"As the owner and operator of the Macondo well, BP has clear financial incentives to assign blame to other parties, but its public posturing is not supported by the body of evidence in this matter," the company said in an emailed statement. "Government investigations have rightly concluded that the Macondo incident was caused by a failure of the cement in the well."
BP has already booked a $32.2 billion charge to cover the long-term costs of the Gulf spill. It is targeting $30 billion in asset sales by the end of the year to shore up funds.
BP Chief Executive Bob Dudley said that Mitsui "is showing great corporate citizenship in standing behind its affiliate and making a contribution to meet the costs of this tragic accident.
"We call on the other parties involved in the Macondo well to follow the lead of the MOEX and Mitsui parties," he added in a statement.
The settlement from MOEX will immediately be paid into the $20 billion trust BP has established to meet individual, business and government claims relating to last year's oil spill.
MOEX had filed a lawsuit in New Orleans on the April 20 anniversary of the Gulf spill, asking a federal judge to declare it was not responsible for the damages and cleanup costs resulting from the worst off-shore oil spill in U.S. history. MOEX was joined by Anadarko in suing BP, with both companies claiming that London-based BP was responsible for the blow-out and the spill.
BP said that the payment from MOEX announced Friday _ to be paid by its parent company, MOEX USA Corp. _ was not an admission of liability by any party regarding the accident. The companies agreed to drop mutual claims against each other.
The news of the settlement coincided with a report from London-based financial services group Investec calling on BP's board to demerge the company into three separate groups _ focused on the United States, Britain and emerging countries.
Investec noted that BP has underperformed the market by 14 percent in dollar terms and is down 5 percent on the year to date.
"BP's business model is broken, in our view," Investec analysts Stuart Joyner and Angus McPhail said in a note. "However, we think it could regain its reputation as the industry thought leader by splitting the company in three."
The pair suggested a U.S. unit listed in New York containing BP's U.S. refining and gas exploration & production businesses. A separate exploration & production business could be listed in London focusing on Britain and mature markets, the analysts said, with a high-growth unit targeting developing countries listed in London and Mumbai/Hong Kong.