The fall-out from the 2010 Deepwater Horizon oil spill still has the capacity to throw up the odd nasty surprise for oil major BP (BP.).
While for the most part the company has been able to leave this near-existential crisis behind it, BP has now announced that higher BEL (Business Economic Loss) claims linked to the disaster would see it take a $1.7bn hit in its fourth quarter results.
These quarterly numbers are already likely to be a bit messy as they are set to include a $1.5bn charge linked to US tax reform.
BMO Capital Markets analyst Brendan Warn says the higher payments are ‘completely manageable’, though by his reckoning the company will need to rely on disposals of $1bn to achieve ‘cash flow neutrality’.
He also recognises the additional risk. ‘We acknowledge the possibility that there might be further provisions in the next few quarters, as the remaining claims might prove to exceed BP’s expectations,’ he says.
This is something to watch closely in case it starts to impinge on BP’s ability to fund sustainable dividends, a key plank of its investment case. BP reports on fourth quarter trading in full on 6 February.
