Oil prices fell rapidly on…
Oil is charging higher to…
The US Supreme Court on Monday denied a request for appeal made by angry BP shareholders who filed a class action lawsuit against UK oil major BP.
The original class action suit was filed by shareholders who had purchased BP shares before the disastrous Gulf of Mexico oil spill in 2010. According to shareholders, BP misrepresented its safety procedures before the spill.
In 2015, the 5th U.S. Circuit Court of Appeals refused to certify the lawsuit on the grounds that some shareholders may have decided to purchase the stock even with full disclosure regarding safety. This is the decision that shareholders were hoping to revive on appeal as part of a class action suit—but today’s ruling came down in favor of the oil major.
Related: The Merger That Could Create a New Oil Major
The door still remains open, however, for shareholders to file suit individually, apart from the class action.
BP’s share price had plummeted in 2010 after the spill, taking on $55 billion in losses as a direct result, which includes $18.7 billion to settle various federal, state, and local claims. In BP’s latest quarterly filing, spill expenses made up the majority of the $896-million charge they booked in the report, compared with a similar charge of just $341 million for the same period last year.
Although BP’s spill-related costs will continue to accumulate, the denial of this appeal may lessen the blow somewhat, but BP is still taking actions to weather hostile price environment.
Related: Why China Is Really Dictating the Oil Supply Glut
To staunch the bleeding, BP said it will cut its capex for the year for $17 billion and possibly to $15 billion in 2017 if the price depression persists. And what BP has reported in profits is mainly thanks to its positive performance of its downstream business, which offsets the losing E&P segment.
BP’s share price is unchanged on the London Stock Exchange, which is closed today, but is currently trading + $.01 on the NYSE.
By James Burgess of Oilprice.com
More Top Reads From Oilprice.com:
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…