Updated from 10:53 a.m. with additional fine information and stock price.
NEW YORK (TheStreet) -- Shares of BP (BP - Get Report) fell -6.01% to $44.85 in afternoon trading Thursday after a federal judge ruled the oil company acted with gross negligence in the Gulf of Mexico oil spill in 2010.
The decision could force BP to pay up to $18 billion in additional fines and penalties to the government, according to Bloomberg. The London-based company has already paid $28 billion since the incident occurred.
"BP's conduct was reckless," U.S. District Judge Carl Barbier wrote in a decision in New Orleans federal court on Thursday. "Transocean's (RIG - Get Report) conduct was negligent. Halliburton's (HAL - Get Report) conduct was negligent."
Barbier placed 67% of the blame with BP, 30% with Transocean and 3% with Halliburton.
The oil company also reduced its daily production target in Iraq's largest oil field. The company signed a deal with the Iraqi government to trim the target at Rumaila but extended its output for five years.
BP now expects production to hit 2.1 million barrels a day in the next 10 years, which is approximately 800,000 barrels more than the current output, the company'said. That figure is less than the company's previous mark of 2.85 million barrels a day.
Separately, TheStreet Ratings team rates BP PLC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate BP PLC (BP) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 65.0% when compared to the same quarter one year prior, rising from $2,042.00 million to $3,369.00 million.
- Net operating cash flow has increased to $7,877.00 million or 46.22% when compared to the same quarter last year. In addition, BP PLC has also vastly surpassed the industry average cash flow growth rate of -5.36%.
- The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.93 is somewhat weak and could be cause for future problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: BP Ratings Report
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