While the recent settlement took the total spill cost to BP to around $US70.5 billion so far, JPM does not see to many more impacts ahead.
"While our estimate of remaining Macondo-related liabilities falls by less than $US2 billion [only 7 British pence per share], we believe that by bringing unexpectedly early and essentially complete closure to the key tail risks to this tragic event BP becomes more investable to some institutions and, in a challenged space, is thus elevated as a sector relative preference," JPM said last week.
"We believe the deferred payment schedules combined with tax shelter [(other than on the Clean Water Act fine payments] make only a very manageable dent on BP's cash flow and balance sheet."
In upgrading the stock rating from neutral to overweight, JPM said BP had resolved the most material remaining liabilities related to Macondo.
"In so doing, it has crystallised a set of cashflow payments that make a very manageable dent to our cashflow forecast and leave its balance sheet gearing below 25% assuming further Macondo provisions," JPM said.
"BP is also differentiating by adapting more appropriately, in our view, to the lower oil price regime that we believe could sustain for some years to come. This still leaves its dividend with no room for growth, but almost covered by cash flow at [an estimated]$US65 per barrel Brent in 2017."
