What happened on April 20, 2010?
Deepwater Horizon was a deepwater, offshore oil drilling rig owned by Transocean (RIG) and operated by BP Plc. (BP). On April 20, 2010, while drilling at the Macondo Prospect, there was an explosion on the rig caused by a blowout that killed 11 crew members. On April 22, 2010, Deepwater Horizon sank while the well was still active and caused the largest offshore oil spill in U.S. history.
After the spill, the U.S. Environment Protection Agency (the EPA) barred BP from bidding for new work in the Gulf of Mexico and supplying fuel to the military. The ban was lifted in March 2014.
Anadarko Petroleum Corporation (APC), Transocean (RIG), and Halliburton (HAL)—the other companies primarily responsible for the incident—have already agreed to pay fines. RIG and HAL are components of the Energy Sector Select SPDR ETF (XLE) and VanEck Vectors Oil Services ETF (OIH).
In January 2013, RIG agreed to pay $1.4 billion for violations of the U.S. Clean Water Act. In September 2014, Halliburton agreed to settle a large percentage of legal claims against it by paying $1.1 billion into a trust.
APC had a 25% stake in the Macondo well in the Gulf of Mexico when the accident happened. In October 2011, Anadarko and BP entered into a settlement agreement. APC sold off the Macondo well in the Gulf of Mexico to BP. It also paid $4.0 billion to BP related to settling all claims related to the Deepwater Horizon incident.
The new ruling may lead to additional penalties that could range from $5 billion to $20 billion, according to initial estimates. Read the following parts of this series to learn more about this.
BP shareholder losses
The fire not only destroyed BP’s physical property and caused casualties, but also destroyed shareholder wealth. From April 19, 2010, to June 25, 2010, BP’s share price came down by 55%—from $59.48 a share to $27 a share.
Subsequently, however, share prices recovered. But they never returned to pre-crisis levels and have hovered around $37 to $52 in the past four years.
Between August 2010 and August 2014, shares have averaged $44 a share. This average is 27% below the peak that shares reached just before the incident.
If the $18.5 billion penalty charge is indeed imposed, BP may find its coffers inadequate to fulfill its obligations. It may be forced sell more assets. Some of its potential sale targets include BP’s projects in Australia, Brazil, and some oil fields in Norway.
BP PLC (BP) is one of the world’s largest integrated oil and gas companies. Its operations spread across 80 countries around the world, including Angola, Argentina, Australia, Azerbaijan, Egypt, Trinidad, the UAE, the UK, and the U.S.
Apple (AAPL) continues to receive challenges to its app business practices. After the US Supreme Court cleared a consumer-led antitrust lawsuit tied to Apple’s app business to proceed last month, a fresh lawsuit targeting the same business has been filed in California.
Cable giant Comcast (CMCSA) has shifted its focus to high-speed Internet, where it is gaining traction amid pay-TV decline.
A federal judge in California last month ruled that Qualcomm’s business practices stifled competition and ordered the company to change its business model. Qualcomm is expected to appeal the ruling. In the meantime, the company wants the ruling set aside until its appeal is heard.
On June 17, Nucor (NUE), the largest US-based steel producer, released its second-quarter earnings guidance. The company expects to post EPS of $1.20–$1.25 in the quarter. In contrast, it posted EPS of $1.63 in the first quarter and $2.13 in the second quarter of 2018.
Hardware technology stock Juniper (JNPR) has returned -5.7% in the last year, 7.7% in the last two years, 14.9% in the last three years, and 7.5% in the last five years, underperforming peers and broader markets. How can it break out of its slump?
On June 17, the Empire State Manufacturing Survey was released by the New York Fed. The index collapsed from 17.8 to -8.6 in June. The collapse was the highest on record, and the print was the first negative since October 2016. Economists had been expecting the reading to come in at 11.0.