Update: Finally Some Good News For BP's Business Economic Loss Settlement

| About: BP p.l.c. (BP)
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Summary

The long awaited deadline for BP’s business economic loss claims has finally been established.

The news actually makes me slightly less bearish on BP.

I anticipated the exact date, but wasn’t 100% sure if the court administrator had another date in mind.

I've written and published many BP (NYSE:BP) articles concerning its mega-billion dollar settlement for business economic loss claims for its April 2010 Deepwater Horizon disaster and resulting oil spill. The deadline to file a claim has always been the latter of April 2014 or six months after the last legal appeal is exhausted. I've been contending this whole time that BP is its own worst enemy, first for entering an uncapped settlement, and then for the ridiculous fight against its own settlement.

My reasoning was BP didn't have any realistic chance of getting out of such a clear-cut objective, formula-driven settlement and it would get laughed out of the courts all the way to the Supreme Court. Now, the Supreme Court took one look and unanimously dismissed BP on Dec. 8, and so the last legal option has been exhausted. The six-month countdown began that day, and on Dec. 17, the official announcement came by the claims administrator that the deadline for new claims is June 8, 2015. Thanks to the Supreme Court, BP can stop harming itself and its shareholders.

To briefly recap, in Sept 2013, I stated in my article entitled, 4 Reasons Why Businesses Should And Will File More Claims Against BP,

"To make matters even worse, the original April 22, 2014 deadline to file new claims will likely be extended by months or even years. This means even more money out of BP's pocket and even more uncertainty for investors."

The settlement is officially extended by one year plus one and a half months. That part is bad as it means 13.5 months of new claims being filed and paid out which is likely billions of dollars that BP could have avoided in claims and legal fees. The good news is there is actually an end date now and the new claims will stop June 5. Claims may pick up pace as the deadline approaches, but that was bound to happen no matter what the deadline. As I mentioned in my article entitled, The Worst Is Yet To Come For BP's Oil Spill Settlement,

Patrick Juneau, the attorney in charge of overseeing BP's settlement, stated that as the deadline for claims of April 22, 2014, approaches, the pace is certain to pick up more. "It's happened in every case I've been involved in, and there's no reason to believe it would be otherwise in this case," he said. This means that if we are to expect a faster pace of claims filed, then my above number of claims is probably too conservative."

Then more recently in my article entitled, Update: BP's Fourth Quarter Business Economic Loss Claim Charges Will Be Material, and the day before the Effective Date was established as Dec. 8, 2014, making June 8, 2014 the deadline I stated,

"Despite BP exhausting its last legal option with the Supreme Court refusing to hear its plea, an Effective Date has yet to be established. Once that date is established, which is supposed to come after all appeal options from both sides is finished, a deadline for new claims will come exactly six months after the final Effective Date."

With the deadline finally set, investors should breathe a little easier. I wouldn't exactly call this a reason to run out and buy BP stock, but the odds just lifted a notch up of BP surviving along with maintaining its dividend, unless cheap oil prices spoil that plan. It will be interesting to watch and document (and report to you) the progress of new claims. If the rush of new claims doesn't materialize as expected, it would be very bullish for BP stock. However, in the interest of keeping my reputation intact for being neutral with my BP articles, I will likely remain on the sidelines regardless.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.