The Gulf Spill: Who Did What and When?

It likely seems that you can't escape constant reportage and opinions about the assignment of fault in the explosion aboard the Deepwater Horizon rig on that horrible April night in the Gulf of Mexico.

But I have a confession to make: In the very first days after the catastrophe occurred, I assumed that one of the other companies involved in the well might have been culpable.

I might have blamed Transocean (NYSE: RIG), or cementing contractor Halliburton (NYSE: HAL), or even blow-out preventer manufacturer Cameron (NYSE: CAM). But I'm now essentially convinced that the fault almost certainly was with BP (NYSE: BP).

For instance, rumors suggest a Schlumberger (NYSE: SLB) crew was on the Deepwater Horizon to run a Cement Bond Log, only to find the well kicking far more than it should have been. A disagreement ensued when the Schlumberger crew advised that the well be immediately shut in. When the BP representative refused, the Schlumberger crew returned to the shore -- a matter of hours before the explosion -- and without having run their test.

Further, the weekend Wall Street Journal included an article entitled "BP Relied on Cheaper Wells." The contention is that BP uses the "long string" design on far more of its wells than its peers. For instance Chevron (NYSE: CVX) only used the long string design in 15% of its wells vs. 35% for BP. The long string is cheaper and faster than the alternative "liner tieback" method, but it also provides less protection against oil and gas flowing unchecked up the well bore, especially in high-pressure wells.

BP owns 65% of the well, and is its operator. Anadarko (NYSE: APC) owns another 25%, while Japan's Mitsui has the remaining 10%. Convention holds the junior partners responsible for their percentage of operating and cleanup costs. That could saddle Anadarko with billions of dollars in costs.

But the Houston company maintains that its share of the costs are contractually nullified when damages result from the operator's "gross negligence or willful misconduct." If Anadarko is successful in squirming out of its liability, it should do wonders for a stock that is down over 40% since the disaster started.

Stand by for lengthy litigation. It took ExxonMobil essentially 20 years to leave the courts following its Valdez spill. If the accusations of gross negligence stick, the survival of Tony Hayward's company comes more and more into question.