Following a year and a half to which "agonizing" is among the many adjectives that might have been applied, it just might be that British oil giant BP (NYSE: BP) has turned a corner and is headed for better times. That, at least, would be the indication from the company's run of recent luck, which, including a big new discovery in the Gulf of Mexico, has generally occurred under the radar.

Even if you've never placed a single energy company's share in your portfolio, you know all about the company's tragic April 2010 explosion aboard Transocean's (NYSE: RIG) Deepwater Horizon rig as it was completing the drilling of the Macondo well in the Gulf of Mexico. The result included 11 deaths, the burning and sinking of the big rig, and the worst oil spill in U.S. history. Further, deepwater drilling in the Gulf was halted until March of this year; BP's then CEO Tony Hayward was replaced by its current leader, Bob Dudley; and the company essentially became a pariah in the oil industry and beyond.

At least since the Macondo gusher was finally capped in mid-July, the lion's share of concern at BP has involved raising and setting aside funding to compensate victims of the spill. Early on, essentially at the behest of the U.S. federal government, a $20 billion trust fund was established as a foundation for compensatory payments. Through the middle of last month, about $7 billion had been dispensed to victims of the spill, both businesses and individuals.

BP the merchandiser
BP's original plan was to sell off about $30 billion of its non-core assets to cover the costs of the spill, which could eventually run up a $40 billion tab for the London-based member of Big Oil. When it announced its third-quarter results, about $26 billion of its assets had been spoken for. At the same time, however, Dudley noted that he was inclined to ratchet up the original $30 billion targeted sales figure by another $15 billion, bringing it to $45 billion. Of the additional amount, $6 billion relates to the expected sale of a pair of U.S. refineries.

However, the $26 billion total included slightly more than $7 billion for BP's 60% interest in Argentina's Pan American Energy, the remainder of which is owned by Bridas, itself a joint venture between Bridas Energy Ltd., a privately held Argentine company, and CNOOC (NYSE: CEO) China's largest offshore operator. However, for reasons that remain somewhat murky, that deal went caput last weekend, meaning that it'll now be necessary for BP to intensify its efforts to jettison a portion of its properties.

The company rakes in positives
But that shouldn't be an excessively formidable task, given the company's remaining portfolio of choice assets. Besides, when you have properties worth billions of dollars on the market, you'll inevitably have an occasional deal fall through, while, conversely, some positive surprises will show themselves. Indeed, "positive" appears more and more apropos for the recently battered BP:

  • In mid-October, BP and Anadarko (NYSE: APC), its 25% partner in Macondo, reached an agreement wherein the latter agreed to pay BP $4 billion in a partial settlement related to the tragic blowout, along with handing over its 25% interest in the well. Of nearly equal importance, the settlement lends some credence to BP's claims of shared responsibility for the disaster. Suits with Transocean and Halliburton (NYSE: HAL), the well's cementer, will further test that notion in New Orleans courts beginning in February.
  • Dudley noted in October that BP has initiated a concentration on drilling for value, rather than purely for increased production levels. By concentrating on the likes of the North Sea, the Gulf of Mexico, and Angola, he expects the company's cash flow to increase by 50% by 2014.
  • Earlier this month, BP, the largest leaseholder in the Gulf of Mexico, which was newly permitted by the Bureau of Safety and Environmental Enforcement to resume operations there, announced that it had made a major discovery in a heretofore untested northern portion of its Mad Dog Field Complex, about 335 kilometers south of Grand Isle, Louisiana. Mad Dog, which is 60.5% BP-owned, with smaller interests held by BHP Billiton (NYSE: BHP) and Chevron (NYSE: CVX), may contain as much as 4 billion barrels of oil equivalent.
  • Also this month, the U.S. Coast Guard unleashed BP from the responsibility of cleaning up oil that washes up in the Gulf of Mexico -- unless, of course, the oil can be definitively proved to have come from the Macondo well. With about 90% of the Gulf coast apparently having been cleaned, the company will now concentrate on restoration of spill-damaged areas, projects for which BP has reserved about $1 billion.

The Foolish bottom line
There are other encouraging attributes to BP these days, such as its operating success in Iraq, although I remain concerned about the companies working in that country -- including ExxonMobil (NYSE: XOM) and many of the world's other large operators -- once the remaining U.S. troops have been removed from that country. Nevertheless, I'm convinced that the company has turned the corner and will move toward closing its significant valuation gap with its peers.

For instance, while BP shares remain nearly 25% below their value the day before the Macondo blowout, Chevron shares have moved more than 35% in the other direction during the same period. While BP clearly won't accomplish a catch-up over night, there's suddenly sufficient progress being made at the company that -- with crude prices moving steadily higher -- it really should be placed on your Watchlist and perhaps in your portfolio.

Looking for more ideas? The Motley Fool has created a new special oil report titled "3 Stocks for $100 Oil," which you can download today, absolutely free. In this report, Fool analysts cover three outstanding oil companies. Get instant access to the names of the three oil stocks -- it's free.