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LONDON, Sept 5 (Reuters) - BP should be able to meetthe cost of up to $18 billion of new fines for the 2010 Gulf ofMexico oil spill without major asset sales or a big cut in itsdividend, analysts say.
The oil group's shares dropped nearly 6 percent on Thursdayafter U.S. District Judge Carl Barbier in New Orleans,Louisiana, said it was "grossly negligent" in the April 20,2010, rig explosion and spill that killed 11 workers.
However, BP said it would appeal the ruling, meaning anydecision on indemnities could be years away.
"The headline is obviously negative, but BP will appeal andthe appeals process is likely to be dragged out for years," saidBernard Hodee, analyst at Raymond James, which kept its ratingon BP shares unchanged at "fair value".
BP has set aside only $3.5 billion for fines under the CleanWater Act, part of a much broader series of provisions forcleanup, compensation and damages that exceed $42 billion.
But it could be liable for up to $17.6 billion if its appealagainst the "gross negligence" ruling is denied.
"It's a big hit financially, but not a strategy-alteringblow. It would have obviously preferred alternative uses for thefunds and it is negative but I don't think it changes BP'scourse. The hard lifting was done in 2010-12," said Jefferiesanalyst Jason Gammel, referring to asset sales in those years.
The unwelcome news, at a time when many oil firms arestruggling to cut costs in the face of shrinking profits, isunlikely to have much impact BP's dividend payments in thenear-term, as the company had $27.5 billion in cash andequivalents on its balance sheet at the end of the secondquarter.
"Although this is now a point of high uncertainty forinvestors, we believe the financial implications of this rulingwill remain significantly below the maximum - the Citi estimateis $8.2 billion - a sum that should not impact on BP's abilityto fund future growth ambitions nor shareholder dividends," Citisaid in a note, signalling they expect the eventual level offines will be well short of the $18 billion maximum.
It upgraded its BP share valuation to "buy" from "neutral",raising its price target to 510 pence from 480 pence.
The case will go on for months or even years with Barbierset to assign damages after the next phase of a civil trial overthe accident, scheduled for January 2015. The two earlier phasesof the trial looked at how to apportion blame and examined howmuch oil spilled.
BP shares were flat at 455 pence by 0740 GMT on Friday. (Reporting by Ron Bousso and Dima Zhdannikov; Editing by MarkPotter)
