New York - A US judge has ruled BP was "grossly" negligent and "reckless" in the Gulf of Mexico oil spill, which killed 11 people with the oil group facing a possible $18bn fine.
However, BP said it would appeal the ruling by US District Judge Carl Barbier in New Orleans, Louisiana, meaning any decision on indemnities could be years away.
"The headline is obviously negative, but BP will appeal and the appeals process is likely to be dragged out for years," said Bernard Hodee, analyst at Raymond James, which kept its rating on BP shares unchanged at "fair value".
BP has set aside only $3.5bn for fines under the Clean Water Act, part of a much broader series of provisions for cleanup, compensation and damages that exceed $42bn.
But it could be liable for up to $17.6bn if its appeal against the "gross negligence" ruling is denied.
READ: BP faces billions in fines over oil spill
"It's a big hit financially, but not a strategy-altering blow. It would have obviously preferred alternative uses for the funds and it is negative but I don't think it changes BP's course. The hard lifting was done in 2010 to 2012," said Jefferies analyst Jason Gammel, referring to asset sales in those years.
The unwelcome news, at a time when many oil firms are struggling to cut costs in the face of shrinking profits, is unlikely to have much impact on BP's dividend payments in the near-term, as the company had $27.5bn in cash and equivalents on its balance sheet at the end of the second quarter.
"Although this is now a point of high uncertainty for investors, we believe the financial implications of this ruling will remain significantly below the maximum - the Citi estimate is $8.2bn - a sum that should not impact on BP's ability to fund future growth ambitions nor shareholder dividends," Citi said in a note, signalling they expect the eventual level of fines will be well short of the $18bn maximum.
READ: BP can absorb oil spill fine
It upgraded its BP share valuation to "buy" from "neutral", raising its price target to 510 pence from 480 pence.
The case will go on for months or even years with Barbier set to assign damages after the next phase of a civil trial over the accident, scheduled for January 2015. The two earlier phases of the trial looked at how to apportion blame and examined how much oil spilled.
Shares in BP has extended losses on Friday, with the stock remaining impacted by the US judge's decision.
"Judge Barbier's ruling that BP was grossly negligent with respect to the Deepwater Horizon accident and that its activities at the Macondo well amounted to wilful misconduct does come as a surprise and is close to the worst case scenario we could envisage for the stock," Barclays analysts wrote in a research note.
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