BP's Deepwater Horizon Costs Reach $65 Billion
BP said on Tuesday it would take a new charge of $1.7 billion in relation to claims over the 2010 Deepwater Horizon spill, raising the company's total costs to around $65 billion, higher than the $61.6 billion the company estimated in 2016.
The post-tax, non-operating charge of $1.7 billion expected to be spread over multiple years comes after claims resolved in recent months were about seven times higher than anticipated. Cash payments related to the spill in 2018 are now anticipated to be around $3 billion, as compared to the company’s third-quarter estimate of just over $2 billion.
The claims were part of the Court Supervised Settlement Program that was set up in the wake of the disaster and included nearly 400,000 cases, BP said. The Court Supervised Settlement Program established as part of the Deepwater Horizon class action settlement is now winding down. Brian Gilvary, BP’s chief financial officer, said: “With the claims facility’s work very nearly done, we now have better visibility into the remaining liability. The charge we are taking as a result is fully manageable within our existing financial framework, especially now that we have the company back into balance at $50 per barrel.”
BP says will continue to vigorously appeal determinations of claims that it believes are non-compensable under the Plaintiffs’ Steering Committee settlement agreement. BP has processed more than 99 percent of about 390,000 claims and hopes to settle the several hundred remaining cases in the coming months.
The explosion and collapse of the Deepwater Horizon oil rig on April 20, 2010, left 11 workers dead and huge stretches of the Gulf of Mexico fouled with oil that gushed from the site for 87 days.