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Analyst sees BP seeking higher Anadarko payout

20 Jun 2011 15:27 (+01:00 GMT)
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Houston, 20 June (Argus) — BP is likely to press to extract a higher share of Macondo oil spill costs from US independent Anadarko Petroleum than the oil major accepted under a settlement last month with its other partner in the ill-fated well, Japanese trading firm Mitsui, according to analyst Pavel Molchanov of Raymond James & Associates.

The $1bn that Mitsui agreed to pay for its 10pc stake in Macondo amounted to less than half of the firm's accrued share of costs from the record Gulf of Mexico spill and indemnified it from future expenses. BP is not inclined to be as “generous” with Anadarko, owner of a 25pc interest in the well, because the major has greater leverage than with Mitsui, which held its stake through a special-purpose entity with little or no other assets to take in the event of a bankruptcy, Molchanov said today in a report to clients.

“With Anadarko, one of the largest US [exploration and production] companies, the situation is obviously not the same,” said Molchanov, who wrote his report following investor meetings with BP officials last week.

BP, which operated the well and recorded almost $41bn in charges to account for potential Macondo liabilities, has said its partners owe spill costs commensurate with their ownership stakes. Anadarko has said it owes nothing because the April 2010 blowout that killed 11 rig workers and led to the spill resulted from gross negligence and reckless disregard for safety by BP.

But the independent said last month that it was open to settlement talks with BP. “We feel very strongly about our position, but we're prepared to come to the table under the right circumstances,” chief executive officer Jim Hackett said.

Those circumstances may include reaching a global settlement with multiple parties, covering all potential liabilities from Macondo.

BP expects to secure permits to resume work in the Gulf of Mexico this summer, starting with plugging wells that the company is abandoning and “progressing to actual drilling” toward the end of 2011, Molchanov said.

“This should be seen as another catalyst, not only from an operational standpoint, but also a tangible signal that BP is rebuilding its reputation with federal regulators,” he said.

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