Still Collecting Lawsuits, Oil Giant Resumes Drilling
Last week, the largest leaseholder in the Gulf of Mexico was granted permission to drill there. BP (NYSE: BP) will rejoin the game by drilling a well in 6,000 feet of water 250 miles south of Lafayette, La. This is a great time to check in to see how BP is doing in the aftermath of the disaster.
Teammates, until things go south
BP has maintained a continuous presence in the Gulf as a partner on several wells, but this is the first time the company will be an operator of a well since the Macondo blowout last year. That's something to keep in mind with oil production: Be it a disaster or a success, drilling a well is a team effort.
Just ask Anadarko (NYSE: APC) . The oil company recently agreed to pay BP $4 billion for its role in the disaster. As a result, the company lost $3.1 billion in the third quarter; net losses were $6.12 a share.
BP is still fighting in court with the other two well partners. Transocean (NYSE: RIG) claims that a provision in its contract with BP absolves it of any responsibility for the disaster, even in the case of gross negligence. Meanwhile, Halliburton (NYSE: HAL) is suing BP for negligent misrepresentation and defamation. Halliburton was the contractor responsible for cementing the well.
So many lawsuits
The court battle with Transocean is just one of many lawsuits on BP's plate right now. There are more than 350 others out there, and the company is facing billions of dollars in damages claims, though at this point, investors are probably wondering if legal fees might end up costing the company more. The company will pursue as many out-of-court settlements as possible in order to avoid longer, costlier court battles.
BP marches on
The company is going to great lengths to stay afloat. After an annual loss of $5 billion last year, BP has begun to sell off assets, including a recent jettison worth $13 billion. Overall, it is looking to increase its upstream operations and decrease the downstream side of its business, though the company does not intend to completely sell off its refining and gas station properties.
Selling off its assets pinched BP in the third quarter, as production was down 12% from last year, but that number will likely climb now that the company is able to drill again in the Gulf of Mexico. Additionally, over the next two years, the company intends to increase the number of planned wells from six per year to 25.