BP says oil spill costs $350 million so far, shares hit

LONDON (Reuters) - Oil major BP Plc said the oil spill in the Gulf of Mexico had cost it $350 million so far, suggesting the final bill could be much higher than many analysts predicted and sending its shares to a six-month low.

Crews work to collect oil near and around the location where the Deepwater Horizon oil platform sank, in this photo taken May 8, 2010. REUTERS/U.S. Coast Guard/Casey J. Ranel/Handout

BP said on Monday the sum referred to the cost of spill response, containment efforts, relief well drilling, payments to the Gulf Coast States to speed up their response plans, some compensation claims and federal costs.

The London-based group -- which until the leak was Britain’s largest company by market value -- declined to give a further breakdown, such as what types of compensation payments had been made, or were still pending.

BP shares fell 0.8 percent at 1430 GMT (10:30 a.m. EDT), lagging a 4.1 percent rise in the STOXX Europe 600 Oil and Gas index. The stock dropped as low as 540.7p, its lowest since November 2009.

The stock has lost around 15 percent since the Deepwater Horizon rig caught fire with the loss of 11 lives, wiping around $30 billion from BP’s market value.

Analysts have offered forecasts for spill clean-up costs and compensation that range from a few hundred million dollars to over $12 billion.

BP’s latest figures show the smaller estimates to be wildly optimistic, but Neil McMahon, oil analyst at brokerage Bernstein, which had offered the highest and most detailed forecast seen by Reuters, said on Monday he was sticking with his prediction that costs could be up to $12.7 billion.

However, on top of this, McMahon said BP’s operating costs in the United States could rise 10 percent due to increased regulatory oversight and reviews of the safety of its operations.


Until the end of last week, BP said the clean up effort was costing $6 million a day.

Over the weekend, BP suspended operations on a plan to cap the leak with a metal dome, due to problems with gas coming from the well.

The company said it was investigating other possible options to cap the leak, while continuing to drill another well that it said was certain to stem the flow but which could take three months to complete.

“BP appears to be turning to more adventurous, and potentially more expensive, solutions,” analysts at BOA Merrill Lynch said in a research note.

The final bill is likely to be much higher than the $350 million figure announced on Monday as the well which caused the leak is still pumping at least 5,000 barrels per day of crude into the sea and the spill has yet to hit land.

Only traces of oil have been reported on Gulf beaches so far and clean-up costs will accelerate when major landfall occurs.

Fishing has been impacted, prompting fishermen’s groups to lodge lawsuits for damages, while others, including people in the tourism industry, have complained of losses due to the spill.

Fishing and tourism damages could run into several billions of dollars, analysts said.

The spill is expected to next head westward, suggesting important shipping channels off the central Louisiana coast, west of the Mississippi Delta could be impacted.

BP has said it would cover all legitimate claims for compensation.

BP owns 65 percent of the well. Anadarko Petroleum owns 25 percent and Japan’s Mitsui owns 10 percent. All are liable for costs on a proportionate basis.

Editing by Mike Nesbit and David Holmes