BP shares were sharply higher today after its £4.9 billion deal with 110,000 businesses and individuals over the Deepwater Horizon disaster.
The blue-chip stock rose more than 2 per cent to 509p as City analysts said the out-of-court settlement worth $7.9bn 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 under the US 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 compensation fund that it set up following the worst spill in US history.
BP chief executive Bob Dudley said: “From the beginning, BP stepped up to meet our obligations to the communities in the Gulf Coast region and we’ve worked hard to deliver on that commitment for nearly two years.
“The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident and contributing further to economic and environmental restoration efforts along the Gulf Coast.”
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.
A trial in the case that was due to start on Monday has been postponed indefinitely to allow BP to finalise its deal with the PSC.
BP had been due in the dock in New Orleans alongside contractors Halliburton and Transocean as a single judge decided who was to blame for what happened when the rig exploded. All the companies are in dispute with each other over their liability to each other.
The 2010 spill soiled sensitive tidal estuaries and beaches, killed wildlife and closed vast areas of the Gulf to commercial fishing for months.
Dispersants and siphoning equipment and other methods were successful in getting rid of much of the oil in the ocean, but some environmentalists believe oil beneath the surface could return one day to Gulf shores.
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 in clean-up costs and compensation.