Accident Fails to Put Dent in BP's U.S. Ambitions

11 16, 2012 by The Wall Street Journal

BP PLC's operations in the U.S., which once seemed in jeopardy because of the Deepwater Horizon disaster, have instead taken on greater importance at the London-based oil giant.

The company employs about 23,000 people—30% of its workforce—in the U.S., which is home to 40% of its shareholders. It also produces 20% of its oil and gas in the country.

BP remains the largest oil producer in the U.S. Gulf of Mexico, and runs a huge oil field in Alaska's Prudhoe Bay. It maintains strategically important refineries in Washington, Ohio and Indiana. And the company is exploring for oil and gas in emerging shale formations located in Texas, Oklahoma, Arkansas, Louisiana and Ohio.

Its chief executive, Bob Dudley, is an American, who in a speech at Harvard University on Tuesday said BP remains "committed to the U.S. and to our role in its energy industry."

Nevertheless, the Deepwater Horizon affair has left BP in a much leaner condition. The company had to sell assets across the globe to raise money it needs to pay for the spill's costs, garnering $35 billion as of October. Sales in the U.S. included two large oil refineries—one in California and one in Texas—and some lease holdings in the U.S. Gulf of Mexico.

Analysts reacted positively to BP's settlement of its criminal liability, in which the firm pleaded guilty to 11 felony counts relating to the deaths of rig workers and to obstruction of a congressional investigation. The firm agreed to pay $4 billion—including $1.26 billion in criminal fines—in restitution, and will also pay $525 million to settle a civil complaint by the Securities and Exchange Commission over its disclosures about the size of the spill early on.

BP said it would take a $3.85 billion charge as a result of the settlement, on top of a previous charge of $38 billion related to the spill costs. The company still faces a significant liability over civil violations of the Clean Water Act.

The company's relations with U.S. authorities will remain contentious while they wrangle over those civil liabilities. But Thursday's settlement helps BP along that path, said Dan Pickering, chief investment officer at TPH Asset Management. "Symbolically, they've fallen on the sword," he said. "This is all part of the process of addressing this spill prudently and moving on."

Executives have made it clear BP is committed to drilling in the U.S. over the long term. Bernard Looney, executive vice president for developments, said in a speech in Houston in April that the company would invest $4 billion in its Gulf operations in 2012—and at least that amount every year over the next decade.