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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (158631)	10/24/2011 9:26:41 AM
From: Dennis Roth	1 Recommendation Respond to of 206181

BP (BP) GOM, TNK, APC all good, but don’t get complacent on DOJ 24 October 2011 ¦ 12 pages citigroupgeo.com Last week was a good week for BP — Three key announcements act to reduce some of the financial risks that the market was looking to price-in on BP: (1) a financial settlement with Anadarko for outstanding costs relating to Macondo; (2) the award of the company’s first drilling permit in the Gulf of Mexico; and (3) an apparent warming of relations with Russian TNK partners that had cooled earlier this year. But one big risk still remains — The financial impact of fines and penalties arising from Macondo. These are due to be decided at the multi-jurisdiction proceedings in New Orleans, which start on Feb 27th, 2012, or before that if parties can settle. The big unknown is what argument the U.S. Department of Justice will bring. We believe that investors should not be complacent on this issue, a position that we feel the market has migrated to following BP’s settlements with Anadarko, Mitsui and Weatherford. What could be the DOJ case? — We see some risks that DOJ could still build a case of gross negligence, a scenario that potentially escalates fines and penalties above current provisions. Our concerns are the extent to which DOJ could follow one of the themes of the recent U.S. Coast Guard report on Macondo: although the Panel declared there was no single reckless decision, it looked to argue that the operator made a series of decisions that reduced costs and increased risks. Can negligence be elevated to gross negligence by a series of acts? Ours is not a qualified legal opinion, but we warn investors not to be complacent. DOJ will unveil its position in the coming months.