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Nearing the end of a lengthy legal battle and with a chance at another shot producing in the Arctic, BP may be starting to see long-awaited signs of recovery.

Finally, BP's settlement of $7.8 billion to resolve the more than 100,000 claims by individuals and businesses stemming from the 2010 Gulf of Mexico oil spill has been granted preliminary court approval. The accord in question covers both economic as well as medical claims against the company.

However, despite this good news, BP is not out of the woods yet. The settlement in question does not cover claims by the U.S. Government or Gulf Coast states, nor does it eradicate the disputes the company is still involved in with its drilling partners.

Once the fairness trial concludes later this year, a comprehensive trial to deal with the remaining issues will begin. BP asked that this trial be postponed until after the fairness hearing in order to avoid overlapping or parallel actions. A decision regarding whether or not the trial will in fact be postponed is yet to be reached.

As a result of the BP oil spill scandal, BP profits have fallen. The company's profits in the first quarter dropped by 13%. This was unexpected despite the fact that the company had to sell several fields in order to pay for the Gulf of Mexico spill damages, and this in turn caused crude prices to rise significantly. In addition, BP expects to sell more fields in the Gulf of Mexico, which will result in a further drop over the second quarter. Simply, the Gulf cleanup operations are simply costing the company more than it initially expected.

BP stock continues to drop and investors are starting to doubt that the company, which investors hoped would have recovered from the spill by now.

BP is not the only oil company that is currently involved in legal proceedings. Chevron (CVX) was recently sentenced by a court in Ecuador to pay $18 billion for environmental damages. In response to the sentence, Chevron is seeking proof of fraud and collusion by attempting to gain access to records of alleged bribes that Chevron claims were paid to an environmental expert. The expert in question, Richard Cabrera, may have received bribes from an Ecuadorean bank to support its claims.

And Exxon Mobil (XOM) is another oil company currently engaged in cleanup operations due to its own error, although the cleanup in question is on a far smaller scale than that which BP has had to contend with. The company's 22- inch North Line has leaked about 1,900 barrels of oil in Louisiana and cleanup operations in the area are taking longer than the company initially anticipated. That said, cleanup operations are going well and the company is investigating the cause of the leak.

For some good news, BP may have the opportunity to explore offshore in the Arctic for oil. Originally, the deal between BP and Russian-based Rosneft Oil to explore for oil in that area collapsed due to some legal issues that could not be cleared up. Essentially BP's Russian oligarch partners in TNK-BP (a joint venture between BP and a group of Russian investors) objected to the collaboration. Recently, however, Rosneft invited TNK-BP to consider exploring the region and develop mostly untapped offshore energy resources, although talks are yet to occur.

BP is not, however, the only company that stands to benefit from Arctic exploration. Russian President Vladimir Putin recently announced an intention to improve tax terms and other incentives to encourage exploration in remote areas, resulting in companies like Exxon Mobil and Enersis (ENI) also being given the opportunity to explore in the area.

Although BP attempted to minimize the importance of the Arctic when the deal with Rosneft initially fell through, the company expressed a strong interest in exploring this area. In addition, BP has not seen the plans that TNK-BP has for its participation in the Arctic operations. Shareholders at this point are left in the dark about exactly what these plans are. What remains clear is that BP will be unable to develop energy reserves on the Russian continental shelf without collaboration with Rosneft. This is solely because Rosneft is one of the only two companies that meet the necessary requirements necessary to develop the Russian continental shelf. This is certainly a long-term strategy for BP, as production may well be a few years out.

Delta Air Lines (DAL) is in the process of acquiring a refinery that BP competitor ConocoPhillips (COP) had planned to shutdown. The reason for this is that Delta wants to have some in-house jet fuel production, which will no doubt save the airline company a significant amount of money in times to come. This is an experiment in the U.S. Never before has an airline company owned an oil refinery. The move could start a new trend in the industry, or break a new idea. Either way, it's worth monitoring as it offers the possibility of both a new competitor in oil and fuel, or, at the very least, another interest buying party.

BP competitor Royal Dutch Shell (RDS.A) has shutdown a pipeline in Nigeria in order to repair it because of thefts which have caused the pipeline to leak. At this point, we don't know how long the shutdown will last. We do know, however, that the company has deemed it necessary to deal with the leaks before it continues production. The slowdown in production could hurt the company, so expect it to contain the situation as soon as it can. BP, of course, would welcome any problems its competitors face at this point.

Look for BP to try to get its legal team out of court and looking into a possible Rosneft agreement as soon as it can. Whether the new production plans pan out or not, BP desperately needs something to give it a boost. Without a new development, I predict BP stock will slide down toward its 52-week low of $33.62.

Source: BP Could Tumble $6 Lower By 2013