BP Reaches Settlement in Gulf Spill Suit

BP PLC said late Friday it has reached a $7.8 billion settlement with a “substantial majority” of the thousands of plaintiffs who sued in the wake of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico.

BP said the settlement will be paid from a $20 billion trust fund set up after largest maritime oil spill in U.S. waters.

“The proposed settlement represents significant progress toward resolving issues from the Deepwater Horizon accident,” BP Group Chief Executive Bob Dudley said in a company statement.

U.S. District Judge Carl Barbier in New Orleans late Friday ordered a delay in the trial that was scheduled to begin Monday and scheduled a status conference on the settlement talks for the same day.

James Roy and Stephen Herman, the lawyers for the thousands of business owners, residents and other others directly affected by the spill, said the settlement “does the greatest amount of good for the greatest number of people,” according to reports.

BP still faces more litigation involving well contractors Transocean Ltd., Halliburton Co. and Cameron International Corp., as well as the U.S. government and the Gulf states.

The suit in New Orleans federal court arose after the Deepwater Horizon drilling rig blew up on April 20, 2010, killing 11 workers.

The blast also caused a leak of about 4.9 million barrels of oil from the Macondo oil well, located under in water a mile deep. It took BP until September to cap the leak.

BP’s Dudley said the deal represents progress toward resolving issues surrounding the accident.

BP’s projected settlement cost of $7.8 billion includes a commitment of $2.3 billion for economic loss claims by the Gulf seafood industry, the company said.

In addition to the $7.8 billion, BP said it’s already spent more than $22 billion in the Gulf, including $14 billion on its operational response and $8.1 billion to individuals, businesses and government entities.

“As long as the amount isn’t prohibitive, I think settlement is a more favorable outcome than a trial,” Phil Weiss, an analyst with Argus Research, told MarketWatch last week.

Analysts at Tudor Pickering Holt wrote in a note to clients last week that it took about 17 years for the plaintiffs in the 1989 Exxon Valdez oil spill in Alaska to receive cash. The slow pace of that case may have influenced the BP litigants to settle now.

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Source: MarketWatch