BP set to gain over oil spill deal

BP Plc is poised to gain at least 5 per cent this week after a $7.8 billion (Dh28 billion) settlement with victims of the worst US oil spill, an analyst survey showed. BP shares will probably rise to a minimum of 520 pence from the close of 496.5 pence on Friday, according to the forecasts of five oil industry analysts. Jason Kenney, an analyst for Banco Santander SA in Edinburgh, said the stock may climb as high as 580 pence over time if additional spill costs stay within the company's estimates. The deal with businesses and individuals, reached after markets closed last week, was lower than the $14 billion that had been discussed, according to people familiar with the talks, and the money for the settlement will come from the $20 billion compensation fund that Chief Executive Officer Bob Dudley has already provisioned for. BP still faces pollution fines and penalties under the Clean Water Act in a suit by the US Department of Justice. The agreement is "very positive," Fadil Gaith, an analyst at Oppenheimer & Co. in New York, said. It "could speed up a government settlement and remove this dark cloud that has been hanging over BP for two years," he said. BP's market value has dropped by about £29 billion (Dh168.67 billion) since the explosion on April 20, 2010, on the Deepwater Horizon rig that killed 11 workers and started the spill. Shares closed at 642.5 pence the day before the disaster. London-based BP still faces as much as $17.6 billion in fines for pollution law violations in a suit by the federal government, which will now take the lead in any trial over the spill. Stuart Joyner, an analyst at Investec Securities Ltd., said shares are about 25 per cent below where they would be without the accident. The settlement with victims may push up shares 5 per cent, he said. From gulfnews