17 10 / 2011
BP gets $4 billion from Anadarko for oil spill costs
Under the settlement announced on Monday, Anadarko said it will no longer pursue its allegations of gross negligence against BP. Anadarko was a 25 percent partner in the doomed Macondo well, and BP had sought payments to offset the costs of the spill.BP shares rose 2.2 percent in London on news of the settlement. Anadarko shares were up 3.8 percent to $73.27 in afternoon trading on the New York Stock Exchange.”We regard it as favorable for both companies,” BP Chief Executive Bob Dudley told reporters.Anadarko could have been on the hook for 25 percent of the cleanup costs, compensating those affected, and paying any government fines. It could only avoid this responsibility if it proved that BP had been grossly negligent — something which could, potentially, have added around $18 billion to the total amount of fines BP faced.Anadarko would still be liable under the deal with BP for any fines payable to the U.S. government.Fines for leaking oil into U.S. waters are assessed at a level of $1,100 per barrel, or $4,300 if gross negligence is proven. The government has said the Macondo well leaked almost 5 million barrels into the sea.BP has said the total bill for the oil spill, including government fines, will be $42 billion. This suggests Anadarko could have faced a total bill well above the $4 billion it agreed to pay.LESS LIKELYInvestors have priced in a final cost to the company from the spill that is far above BP’s estimate. Analysts say deals such as the one announced Monday make the worst-case scenario — a final bill in excess of $70 billion — look less likely.”We maintain our view that the ultimate cost to BP could fall … substantially below the cost inferred by the share price fall since the accident,” said Richard Griffith, an oil analyst at Evolution Securities.In May, BP agreed to accept $1.1 billion from the third partner in Macondo, Mitsui & Co, to cover its 10 percent share of cleanup costs.BP’s lawsuits against companies it hired for the failed drilling project are among the hundreds of claims still pending before a federal judge in New Orleans. A trial date has been set for February next year.To share the cost of the spill and cleanup, BP sued Transocean, owner and operator of the sunken Deepwater Horizon rig, cement specialist Halliburton, and Cameron International Corp, which designed the blowout preventer, a device that was supposed to stop the surge of oil.Key to forcing Transocean to meet the cleanup bill — BP has sought the full amount from the drilling contractor — is convincing a court that Transocean was grossly negligent.If BP does recoup cash from Transocean or Halliburton, it will pay a portion of this — up to $1 billion to Anadarko under the terms of the deal.Two lengthy government inquiries have laid the lion’s share of the blame for the blowout at BP’s door.The rig blast killed 11 men and caused more than 4 million barrels of oil from the Macondo well to spill into the sea.The case is In re: Oil Spill by the Oil Rig “Deepwater Horizon”, U.S. District Court, Eastern District of Louisiana, No. 2:10-md-02179.
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11 10 / 2011
Bringing order to the unruly world of early stage entrepreneurship
This article originally appeared in the Venture Capital Journal, a Thomson Reuters publication.
Eric Ries, author of the “The Lean Startup”, offers a worthy attempt to bring the scientific method to the often intuitive exploration of young companies.
What leads most startups astray is the lack of a disciplined, empirical procedure for making decisions, says Ries, who also writes on the blog Startup Lessons Learned and is a 2010-11 entrepreneur-in-residence at Harvard Business School.
Ries is by equal measure upbeat and cautionary. He sees a worldwide renaissance of entrepreneurialism, but worries about wasted, misguided efforts.
Venture investors take heart. He has an answer, which he details in the October 2011 issue of Venture Capital Journal.
“The nice thing about relying on human judgment and using the scientific method is (we develop) a system for training judgment to get better over time,” he told VCJ Senior Editor Mark Boslet. “We will eventually start to develop better entrepreneurial instincts.”
VCJ subscribers can read the full story here, which we’re posting ahead of the October publishing date.
Following is an excerpt of the Q&A:
Q: Are we more entrepreneurial than in the past?
A: My belief is there are more startups operating today than at any time in history. There’s this worldwide entrepreneurial renaissance. But I think it’s not going to come to a good end unless we get serious about systematically improving our entrepreneurial practice. I think there is both greater opportunity and greater waste.
Q: “Build, Measure, Learn” is one of the key messages in “The Lean Startup.” Isn’t that what startups do today?
A: That is one of the things I think is missing in most of the startups I meet with today. When I meet with most entrepreneurial teams, I ask them a simple question: How do you know that you’re making progress? Most of them really can’t answer that question.
Q: If you could give these entrepreneurs one key piece of advice, what would it be?
A: I would say, as an entrepreneur everything you do — every action you take in product development, in marketing, every conversation you have, everything you do — is an experiment. If you can conceptualize your work not as building features, not as launching campaigns, but as running experiments, you can get radically more done with less effort.
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