BP gets $1 bln settlement from Gulf well partner

May 20, 2011 - 12:30 PM

LONDON (AP) — BP said Friday that one of its minority partners in the blown-out Gulf of Mexico well agreed to cover about $1.1 billion in costs. That's raising hopes the oil giant can get money from other companies involved and reduce its bill for the disaster.

BP said that MOEX Offshore 2007 LLC, which had a 10 percent interest in the Macondo well, agreed to recognize findings by the U.S. Presidential Commission that the accident resulted from "oversights and outright mistakes by multiple parties and a number of causes."

As a minority partner, MOEX was obligated to pay a percentage of the cleanup costs. But it had refused to pay BP on the grounds that the incident was the result of BP's negligence. MOEX's about-face is important because it's the first time another company has agreed that BP wasn't solely responsible for the disaster.

MOEX, a unit of Japanese trading house Mitsui & Co., agreed to pay $1.065 billion to settle all claims between the companies. BP said MOEX also acknowledged a U.S. Coast Guard investigation that placed some blame on Transocean, owner of the Deepwater Horizon rig that exploded and sank in April 2010.

BP shares rose 91 cents to $44.80 in New York. Analysts said the deal puts pressure on BP's other minority partner, Anadarko Petroleum Corp., to reach a similar deal.

Argus Research analyst Phil Weiss said the settlement should benefit each of the well owners. That includes Anadarko, which has maintained that BP is responsible for all spill-related costs because it was grossly negligent in its handling of the well.

Weiss said MOEX seems to be getting off easy. A fair contribution would have been about four times more than what MOEX agreed to pay, since the spill cost BP about $40 billion so far and MOEX owned 10 percent of the well.

He said the settlement increases the odds that

BP can collect from Anadarko and other companies involved. That includes Transocean and oil services contractor Halliburton Co. And it signals to shareholders that BP may not face tougher fines for gross negligence under the Clean Water Act.

Anadarko was on the hook for as much as $10 billion, Weiss said, because of its 25 percent stake in the well. Now it knows BP may accept much less. If it gets the same deal as MOEX, that payment could be about $2.5 billion, Weiss estimated.

"This is going to accelerate the pace of talks between them, and I'll bet they'll settle within the next few months," Weiss said.

Anadarko shares added $3.82, or 5.3 percent, to $75.46 per share in afternoon trading. BP shares gained 99 cents, or 2.2 percent, to $44.88 and Mitsui shares lost 25 cents, or 1.5 percent to $16.46.

Anadarko officials said Friday the MOEX settlement hasn't changed anything.

"Our position remains consistent with our previous statements; however, we view BP's willingness to reach settlement with MOEX as a positive step," Anadarko spokesman John Christiansen said.

BP is targeting $30 billion in asset sales by the end of the year to shore up funds.

The news of the settlement coincided with a report from London-based financial services group Investec calling on BP's board to split 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. Shares are still down 26 from their level just before the oil spill in the Gulf.

"BP's business model is broken, in our view," Investec analysts Stuart Joyner and Angus McPhail said in a note. The analysts 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.

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AP Energy Writer Chris Kahn contributed to this story from New York.