DBRS Comments on Gross Negligence Ruling against BP in Deepwater Horizon Spill

DBRS notes that on September 4, 2014, BP p.l.c. (BP or the Company; rated “A” with a Stable trend) was found grossly negligent in the 2010 Deepwater Horizon litigation (the Spill) by the U.S. District Court – Eastern District of Louisiana, leaving BP exposed to a potential liability of up to $18 billion under the U.S. Clean Water Act.

While BP plans to appeal the decision in the U.S. Court of Appeals, DBRS’s rating already incorporates a gross negligent outcome. With sufficient cash flow generation ability, available liquidity and balance sheet capacity, DBRS expects the Company to absorb the estimated impact of the Spill under a gross negligent outcome while retaining its “A” rating.

Notes:
All figures are in US dollars unless otherwise noted.

The applicable methodology is Rating Companies in the Oil and Gas Industry, which can be found on our website under Methodologies.