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June 10, 2010

BP share price plummets

BP shares fell some 15.8 percent in late day trading in the U.S. yesterday, to close at $29.20. Prior to the Deepwater Horizon incident they had been trading at around $59. You can check the current price HERE.

This morning BP issued a statement saying it "is not aware of any reason which justifies this share price movement." And law firm Zwerling, Schachter & Zwerling, LLP announced the filing of a class-action lawsuit based on claims that the company misled investors prior to the Deepwater Horizon spill.

In its statement BP said it continues to keep the market updated on the Gulf of Mexico oil spill through regular announcements.

"The response to this incident is our top priority," said the statement. "BP faces this situation as a strong company. In March, we indicated that the company's cash inflows and outflows were balanced at an oil price of around $60/barrel. This was before the costs of the incident. Under the current trading environment, we are generating significant additional cash flow. In addition, our gearing is currently below the bottom of our targeted range. Our asset base is strong and valuable, with more than 18 billion barrels of proved reserves and 63 billion barrels of resources as at the end of 2009. All [this] gives us significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims."

Meantime, the shareholder class action suit refers to what Zwerling, Schachter & Zwerling says is "a history of safety lapses, cost cutting, and workplace disasters. The suit, filed in the U.S. District Court for the Eastern District of Louisiana, seeks to represent not only American investors, but also people around the world who bought shares in United Kingdom-based BP.

Zwerling, Schachter & Zwerling, LLP filed the class-action lawsuit on behalf of individuals or entities that purchased ordinary shares and/or American Depository Receipts in BP p.l.c. during a period beginning February 27, 2008, through May 12, 2010, (the "Class Period"). BP's ADRs and ordinary shares are actively traded on the New York Stock Exchange (NYSE: BP) and the London Stock Exchange (London Stock Exchange: BP.L), respectively.

The lawsuit notes BP's prior statements about its Gulf operations being a primary economic driver, and the company's assertions that it had the technology to safely conduct the operations. But nearly a month after the catastrophic explosion at the Deepwater Horizon, BP's Chief Executive Officer Anthony B. Hayward admitted that BP did not have the technology available to stop the Gulf leak.

The lawsuit chronicles BP's long history of spills, fires and explosions at its facilities, including a 2005 explosion in Texas City, Texas, that killed 15 people, and a 2006 oil leak in its Prudhoe Bay, Alaska, operations pipeline. In the Alaska case, Zwerling, Schachter & Zwerling served as lead counsel for securities plaintiffs who brought suit against BP, and secured a multimillion-dollar settlement on their behalf.

In the current case, shareholders claim BP violated the Securities Exchange Act of 1934 by issuing false and misleading statements about safety, technology, inspections and precautions at its offshore oil facilities.

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