BP’s Lawsuit Weighs On Its Stock

BP Plc (BP) is an integrated oil and gas exploration company. BP’s headquarters are in London, United Kingdom. The company has a market cap of $139.1 billion, and its stock price is currently trading at around $44.

BP’s overall business, as well as its stock price, has been in a downward spiral. In the second quarter, BP announced that it had lost $1.38 billion. The loss can be partially attributed to BP’s selling of assets, and it is one of the reasons that BP’s stock price has declined by 10% since March. I believe that the primary reason that investors have shied away from BP’s stock is fear over its January 2013 liability trial. It is understandable that the trial, which will determine BP’s liability in regards to the 2010 Macondo oil field disaster, would make investors nervous about the stock. What is at issue in the trial is whether or not BP was grossly negligent in their management of the Deepwater Horizon oil rig. While the Federal Government alleges that BP was grossly negligent, BP says that it is willing to settle on “fair and reasonable terms.” If BP is found guilty of gross negligence, its liability damages under the Clean Water Act could nearly quadruple. BP and the U.S. Government are currently negotiating to settle civil and criminal liability penalties, and for now, neither side is willing to comment on the status of the negotiations. These legal proceedings could profoundly affect BP’s future because, “According to unconfirmed reports, the DOJ is seeking a $25 billion settlement from BP, in an agreement which would settle all civil and criminal charges. To continue reading, click here.