Shares take off as BP agrees Deepwater deal

The leading blue-chip stock rose more than 2 per cent to 509p as City analysts said the out-of-court settlement worth 7.9bn US dollars was less than expected and a crucial step towards removing uncertainty over the business. The US Department of Justice (DoJ) is still bringing a federal negligence case against BP following the explosion on April 2010, which caused millions of barrels of oil to leak into the Gulf of Mexico and killed 11 workers. If BP is found grossly negligent it could be fined as much as 18bn US dollars (£11bn) under the Clean Water Act.

Investec Securities analyst Stuart Joyner said: “Despite the tough rhetoric, the hope will be that the government will now settle. BP can now argue to have (pretty much) completed the remediation and compensation process to the environment and individuals. We suspect it is not in the White House’s interest to drag the process out to the US general election and beyond.”

BP thrashed out an agreement with the Plaintiffs’ Steering Committee (PSC) late on Friday night in one of the largest ever class-action settlements. It expects the money to come from the 20bn dollar (£12.6bn) compensation fund that it set up following the worst spill in US history. In addition to the legal action from the Department of Justice, BP faces action from the states of Alabama and Louisiana, and from its partners on the rig. The 2010 spill exposed oil industry failings and forced BP chief executive Tony Hayward to step down. BP has so far paid out 7.5bn US dollars (£4.7bn) in clean-up costs and compensation.

BP’s shares closed up 8.1p at 504.6p last night.