Deepwater Horizon
BP's Deepwater Horizon oil rig ablaze in the Gulf of Mexico (Reuters)

BP has tapped into almost all of its compensation fund, for those affected by the Deepwater Horizon oil spill in the Gulf of Mexico, after the resource giant shelled out another $1.4bn in its second quarter.

Just $300m (£196bn, €226bn) remains in its fund to compensate those hit by the 2010 Gulf of Mexico disaster, which saw eleven die in the initial rig explosion and millions of barrels of oil flow into the sea over a three month period.

The deadline for compensation claims from businesses hit by the disaster is April 2014.

The oil firm said it would dip into future profits to pay further compensation if its original $20bn pot of cash was not sufficient.

The stock price has dropped by nearly 4% in the early trading session, reaching 449.45p as of 1010 BST.

BP also missed expectations in its second quarter performance. Adjusted net profit in the three month period fell to $2.71bn, down on the quarter before's $4.21bn.

It blamed slowing production across the quarter, as well as its interest in Russian firm Rosneft being hit by a stronger dollar, delayed taxation, and falling oil prices.

London-listed BP is awaiting a US judge's decision on whether or not it broke the Clean Water Act. If it is found to have been "grossly negligent" leading up to the spill, it could be fined $4,300 for every barrel spilt, leaving it with a $17bn bill.

VSA Capital's Malcolm Graham-Wood said BP's share price was being underpinned by its $8bn buy back programme, of which they have spent $2.4bn so far.

"This is the only thing propping up the shares at the moment and looks increasingly reckless as the US situation gets worse and worse," he said.

"The market is expecting a big fine but maybe not the ultimate weapon of sanctions, imagine if BP were banned from owning or operating licences in the Gulf of Mexico or elsewhere?

"Until the court case is over the potential upside on asset value is a waste of time, only then will BP become of investment grade, until then investors should realise that the shares are only where they are because the company is buying them and other investments in the sector offer greater certainty of operating results, a vastly better management and a better ability to sleep at night.

"Overall a pretty desperate statement, the conference call ... will make grim listening."