Analysts: BP report supports case, buoys investors

BP took a step Wednesday towards reassuring investors that it wasn't solely to blame for the Gulf oil spill - and that it won't have to foot the entire cost.

The British oil giant released the results of its own investigation into the April oil rig explosion that sent oil spewing into the Gulf for 87 days. While accepting some responsibility, BP placed plenty of blame with its drilling partners.

"It is evident that a series of complex events, rather than a single mistake or failure, led to the tragedy," said outgoing Chief Executive Tony Hayward. "Multiple parties, including BP, Halliburton and Transocean, were involved."

Experts took the 193-page report as a preview of BP's legal case in numerous pending lawsuits.

The report was welcome news for beleaguered investors. BP shares jumped $1.18, more than 3 percent, to $38.37 in New York. The gain also reflects a boost to BP's credit rating from Fitch Ratings. BP shares have rebounded in recent weeks, but they're still down almost 37 percent since the April 20 explosion on the Deepwater Horizon.

Transocean and Halliburton took issue with the report's conclusions. And BP's investigation is hardly the last word on what triggered America's largest offshore oil spill. Other agencies are looking into the spill including the Justice Department, the Marine Board of Investigation and the National Academy of Engineering.

Still, BP's report shows that the company can make a strong argument for compelling other companies to pay part of the damages, said Argus research analyst Phil Weiss. For instance, the report detailed what Hayward called "a bad cement job" by contractor Halliburton, which was hired to seal the well before the disaster. The report also said Transocean's crew on the ill-fated rig failed to notice that deadly gases had entered the wellbore just prior to the first of two explosions.

"By going out there and saying there were mistakes of judgment, not of the well design, and that other parties made mistakes, that means it will be harder to prove" that BP should be solely responsible, he said.

BP has so far spent roughly $8 billion on the spill. The company expects to spend at least another $24 billion to handle damage claims and other costs. BP's investors in the failed well - Anadarko Petroleum and MOEX 2007 LLC - have refused to help BP pay for the spill. Those companies own 35 percent of the well.

Anadarko maintains that BP was grossly negligent in its handling of the well, which excuses Anadarko and MOEX from damage claims. Company spokesman John Christiansen also pointed out that independent and government investigators have characterized the spill as preventable and the "direct result" of BP's actions.

MOEX declined to comment about the report.

Steve Yerrid, special counsel on the oil spill for Florida Gov. Charlie Crist, said the BP reports outlines the likely legal strategy BP will use to force Transocean and Halliburton to share in the spill costs as well, he said.

"What you're seeing right now is the format of BP's defense," Yerrid said. The defense is, 'We took the initial blow. But it wasn't only me,'" Yerrid said.

Transocean criticized BP's report as "self-serving" and an attempt to conceal flaws in BP's well design. Congressional investigators and the CEOs of major oil companies such as Exxon Mobil and Chevron have criticized BP's design for the well.

"In both its design and construction, BP made a series of cost-saving decisions that increased risk - in some cases, severely," the company said in a statement.

If that's proven to be the case, BP could be found grossly negligent in its handling of the well. Such a determination could expose BP to a government fine of more than $17 billion.

But BP said, "Based on the report, it would appear unlikely that the well design contributed to the incident," because oil and gas flowed up through the bottom of the well as the result of an inadequate cementing job.

BP has already booked a $32.2 billion charge to cover the long-term costs of the spill. It is targeting $30 billion in asset sales over the next 18 months to shore up funds.

Before BP released its report, London-based Fitch Ratings agency upgraded BP to an 'A' rating from 'BBB' adding to the positive sentiment behind BP shares.

Shares of Transocean rose 69 cents to $53.74 while shares of Halliburton gained 37 cents to $30.21. Anadarko shares added $2.12, or 4.2 percent, to $52.39.

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Kahn reported from New York.