UBS has reiterated its buy rating on oil titan BP following its $4bn settlement with Anadarko, which the broker sees as an "important step towards resolution".
On Monday, BP and US counterpart Anadarko have reached a settlement over the Deepwater Horizon rig explosion at the Macondo asset in the Gulf of Mexico. Anadarko will pay BP $4bn in a single cash payment, which will go into the $20bn trust fund BP set up to meet individual, business and government claims relating to the tragic incident, as well as the cost of the natural resource damages.
"The level of settlement and the costs incurred to date suggest to us that the provisioning for environmental costs and economic charges may be too high and BP may be successful in gathering more contributions than we assume - however this may take time to establish and other penalties may also become apparent," the Swiss broker said.
UBS says that the settlement with the US government and the closing of the Department of Justice investigation are now the "critical stepping stones". This, the broker says, should bring an end to the issue and free up the company to get back to work in the Gulf of Mexico.
The target price from 450p to 480p to reflect the de-risked valuation.
BP was among the best performers on Tuesday morning, rising 0.95% to 429.6p by 10:00, bucking the trend as the Footsie sank 1.02%.
Brussels will unveil hefty fines as soon as Wednesday on global banks that allegedly formed cartels to rig two global interest rate benchmarks, in a settlement that is set to break European antitrust enforcement records. The latest crackdown on benchmark manipulation is expected to target up to 10 financial institutions. Some will admit wrongdoing while others will face formal charges alleging they colluded to fix Euribor, Yen Libor or both. The exact level of fines remains c [4 Dec '13]
BP won a big victory in its battle to limit the cost of compensation for its 2010 oil spill in the Gulf of Mexico after an appeals court called for an injunction to suspend payments to businesses that had not suffered losses as a result of the disaster. A majority on a three-judge panel of the Fifth Circuit appeals court ruled that a lower district court should draw up an injunction "tailored so that those who experienced actual injury traceable to loss from the Deepwater Hor [3 Dec '13]
BP has won a significant legal victory in the US after an appeals court ordered an injuction to be placed on payments to businesses which the oil major argued had not suffered losses as a result of the disaster. [3 Dec '13]
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