As BP
is moving towards the last stages of killing the Macondo well, the US
government fine-tuned its estimates of oil spill flow rates up to the
July 15 halt under the sealing cap. This should help estimate the firm's
oil spill exposure, though more regulatory or legal fines could be
determined through the courts over the next few years.
Scientific teams estimate that 53,000 barrels of oil per day were
leaking from the well just before well closure by the sealing cap, and
total oil leaked from the well was about 4.9 million barrels. About
800,000 of the barrels were captured, leaving 4.1 million barrels of oil
spilled into the Gulf. Applying the range of potential civil penalties
at $1,100-$4,300 per barrel spilled, BP's exposure to civil penalties
could be $4.5 billion-$17.6 billion. This comes in below the upper end
of our earlier
estimate for civil penalties of $3 billion-$22 billion. However, we
caution that estimating oil spill costs remains highly uncertain, as BP
still faces continuing oil spill and shoreline cleanup costs, multiyear
funding requirements for the $20 billion claims fund, and potential
future fines or penalties to be determined via the court system.
Catharina Milostan is an equity analyst with Morningstar.
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