BP's Deepwater settlement considered chump change by critics

BP’s Deepwater settlement considered chump change by critics

A U.S. Coast Guard handout image of fire boat response crews as they battle the blazing remnants of the BP-operated offshore oil rig, Deepwater Horizon, in the Gulf of Mexico. BP will pay a record criminal penalty to resolve some of its liability for the 2010 Deepwater Horizon disaster that killed 11 workers.

By Ronald D. White

Nov. 15, 2012 12 AM PT

British oil giant BP is more than prepared for the $4.5 billion in settlement charges it agreed to Thursday, analysts said.

BP agreed to plead guilty to 11 felony counts of misconduct or neglect of ships officers directly related to the 2010 Deepwater Horizon explosion in the Gulf of Mexico that killed 11 workers.

BP also agreed to one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress. The deal requires U.S. federal court approval.

In the third quarter alone, BP raked in sales of more than $93 billion and had a net profit of more than $5.2 billion. That was a result that showed that “BP has made the most remarkable comeback from the most costly industrial accident in history,” said Fadel Gheit, senior energy analyst at Oppenheimer and Co., in a note to investors.

BP’s recent business performance has been so strong that some critics say the fine isn’t punishment enough.

“This settlement is pathetic,” said Tyson Slocum, director of the energy program at Public Citizen, a consumer advocacy group. “The point of the criminal justice system is twofold: to punish and to deter. This does neither. It is a weak-tea punishment that provides zero deterrence to BP or other companies.”

What remains unclear is how the settlement will affect BP’s business in the U.S., particularly in the Gulf of Mexico, where BP remains active. The company has seven rigs drilling in the Gulf and has plans to add an eighth and possibly a ninth next year, Gheit said.

BP faces five years of probation and will undergo scrutiny by two appointed monitors.

In a statement, BP appeared to acknowledge the uncertainty: “Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government.”

BP added that it has “not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement. BP will continue to work cooperatively with the debarment authority.”

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