DBRS Places AA (high) Rating of BP Under Review - Negative

DBRS has today placed the AA (high) Issuer Rating of BP p.l.c. (BP or the Company) Under Review with Negative Implications as the Company’s series of operations to stop the oil spill, started on April 20, 2010, from its operated Macondo well in the Gulf of Mexico have been unsuccessful. The Company cannot provide assurance that the current joint effort with U.S. authorities and industry experts to cap the leaking well using the containment system can stop the flow of oil.

With the lack of success to date of the various measures (including surface containment, various subsea containment and collection attempts, and the latest “top kill” procedure), there is now a higher probability that the oil spill could continue until a relief well is complete and successful. The latter is expected to occur in early August, noting the potential effect of the operation during the hurricane season.

The rating action reflects a higher level of uncertainty since the time of DBRS’s last commentary on May 6, 2010, attributable to the unsuccessful mitigating actions of BP and the continued uncertainty of the financial and business impact of the oil spill on the Company’s financial flexibility, credit metrics and future operations.

DBRS is cognizant of BP’s financial strength and its comprehensive response effort together with all the concerned parties involved. However, there are no reliable estimates of the extent of the clean-up costs and potential liabilities associated with the spill, which could escalate considerably in the foreseeable future, especially in view of potential regulatory and other changes that could affect the existing cap on liability for economic damage from a spill.

Note:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Oil & Gas Companies, which can be found on the DBRS website under Methodologies.

This is a Corporate rating.