BP Posts Internal Report on Spill - Analyst Blog

BP plc (BP) released its internal investigation report on the Deepwater Horizon explosion yesterday. Apart from blaming itself for the accident, BP also holds others such as Transocean Ltd. (RIG) and Halliburton Co. (HAL) responsible.

In its 193-page report, the U.K. oil major cited at least eight errors of judgment and equipment failures that led to the eruption of natural gas from the Macondo well, off the Louisiana coast.

The report said that crew members aboard the rig realized belatedly that the blowout had begun and were probably too late to close the valves on the leak preventer. Instead of diverting the flow of gas, mud and oil safely over the side, the crew routed it to a system that spewed gas onto the rig, where it ignited.

As previously suggested by investigators, BP said that the engineers and employees of Transocean misinterpreted a pressure test of the well's integrity. Moreover, BP blamed employees on the rig from both companies for failing to respond to warning signs indicating the well was in danger of blowing out.

The report is posted on the company's website despite the fact that investigators have not yet started a full investigation of the blowout preventer, the key component that could have cut off the flow of oil from the well.

Apparently, the report is silent about the technical reasons for the blast. It, however, focuses more on the company's legal strategy of distributing the blame among the rig owner Transocean, the cement contractor Halliburton and itself.

Though the spill cost chief executive officer Tony Hayward his job, and the company hundreds of lawsuits as well as charges worth $8 billion to date, BP ADS rose 3.2% yesterday following publication of the internal report. Consequently, our Neutral stance for the company remains with the Zacks #3 Rank (Hold).

 
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