BP spill disaster costs hit $65bn

BP shares fell the most among European energy companies yesterday after announcing a charge of about $1.7bn (€1.38bn) as part of the Deepwater Horizon disaster’s class- action settlement.

BP spill disaster costs hit $65bn

BP shares fell the most among European energy companies yesterday after announcing a charge of about $1.7bn (€1.38bn) as part of the Deepwater Horizon disaster’s class- action settlement.

Cash payments related to Deepwater Horizon in 2018 are now anticipated to be about $3bn, higher than the company’s third-quarter estimate of just over $2bn. The new charge lifts costs to around $65bn.

Although BP said that the charge is fully manageable, BMO Capital Markets analyst Brendan Warn said there’s a risk of “even higher payments”.

BP’s share price dropped by nearly 3%, the most since August, and was the biggest decliner on the Stoxx Europe 600 Oil & Gas index.

“The magnitude of excess payments in the quarter was unanticipated and we recognise the additional risk for even higher payments. The last few remaining claims are likely to be the most complex and substantial, and remaining claims may exceed BP’s expectations,” Warn said.

The post-tax, non-operating $1.7bn charge BP will take in its fourth quarter results came after claims resolved in recent months were about seven times higher than anticipated.

The claims were part of the Court Supervised Settlement Programme that was set up in the wake of the disaster and included nearly 400,000 cases, BP said. A spokeswoman for the group said hundreds of outstanding claims have yet to be closed, raising the prospect of further charges.

BP paid around $63.4bn by the end of September to cover clean-up costs and legal fees linked to the largest environmental disaster in US history in 2010 where 11 rig workers were killed.

Charges over the spill have steadily grown since the company reached a landmark $19bn settlement of federal and state claims in 2015.

In July 2016 BP announced a $2.5bn charge after resolving a number of claims, saying it could “now reliably estimate all of its remaining material liabilities”.

BP’s chief financial officer said yesterday that “with the claims facility’s work very nearly done, we now have better visibility into the remaining liability”.

As a result of the latest charge, BP’s cash payments for the spill are now expected to reach $3bn compared with a previous estimate of $2bn.

Although the settlements of claims in recent months were much higher, BP and analysts expect the latest charge to be fully manageable as BP is set to see a sharp rise in revenue this year due to higher oil prices.

Bloomberg and Reuters

more courts articles

Gary Glitter victim seeking six-figure sum in damages, court told Gary Glitter victim seeking six-figure sum in damages, court told
Man (25) in court charged with murdering his father and attempted murder of mother Man (25) in court charged with murdering his father and attempted murder of mother
Man appears in court charged with false imprisonment of woman in van Man appears in court charged with false imprisonment of woman in van

More in this section

FILE PHOTO The Competition and Consumer Protection Commission has cleared the purchase of Goodbody Stockbrokers by AIB END Goodbody Stockbrokers fined over €1.2m by Central Bank over rules breaches
Nottingham City Centre Stock Irish staff at the Body Shop wait for wages as retailer shuts stores in the Republic
Ryanair comments on Norwegian Ryanair boss O'Leary's spat with Transport Minister over Dublin Airport escalates
IE logo
Devices


UNLIMITED ACCESS TO THE IRISH EXAMINER FOR TEAMS AND ORGANISATIONS
FIND OUT MORE

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
ie logo
Puzzles Logo

Play digital puzzles like crosswords, sudoku and a variety of word games including the popular Word Wheel

Lunchtime News
Newsletter

Keep up with the stories of the day with our lunchtime news wrap.

Sign up
Cookie Policy Privacy Policy Brand Safety FAQ Help Contact Us Terms and Conditions

© Examiner Echo Group Limited