Maximum Fines Still Possible For BP

BP plc (ADR) BP's $3.51 billion provision for future liabilities stemming from the Deepwater Horizon disaster of five years ago may prove too low, an analyst said Tuesday.

Argus' Michael Burke reiterated a Hold rating and said it's conceivable the company could be held liable for up to the $13.7 billion maximum in civil fines allowed in a January ruling by U.S. District Judge Carl Barbier.

Earlier this month, the Justice Department appealed Barbier's ruling to the U.S. 5th Circuit Court of Appeals, saying it would result in too low of a penalty, according to the Times Picayune newspaper.

Burke said significant gains for BP's stock is unlikely until uncertainty over the potential fines abates.

"We expect litigation to continue for many years," Burke said.

Total pretax charges since the spill in April 2010 are $43.5 billion.

BP has about $5.1 billion in cash remaining in its trust fund to pay Macondo claims, according to Burke.

BP has also faced pressure recently from its 19.75 percent stake in Russian oil company Rosneft, Burke said.

BP shares are down 31 percent since the 2010 disaster, although they've gained more than 4 percent during the current year to date.

BP changed hands recently at $39.72, off $0.42 (1 percent).