BP raises total liability from Deepwater Horizon oil disaster
16 July 2016
BP Plc has increased the total liability from the Deepwater Horizon oil disaster, which caused the worst offshore oil spill in US history, by $5.2 billion to $61.6 billion before tax.
The London-based company expected to take a $2.5 billion after-tax charge in its second-quarter earnings following ''significant progress'' in resolution of outstanding claims, it said in a statement yesterday.
Any further payments related to the 2010 incident that killed 11 workers and spewed millions of barrels of crude into the Gulf of Mexico won't have a material impact on financial performance, it added.
"Over the past few months we've made significant progress resolving outstanding Deepwater Horizon claims," chief financial officer Brian Gilvary said in the statement. "Importantly, we have a clear plan for managing these costs and it provides our investors with certainty going forward."
BP underwent a transformation in the wake of the spill, with chief executive officer Tony Hayward resigning and the company forced to sell assets and downsize its operations to cover the billions of dollars of fines, penalties and compensation.
The company pumped 3.14 million barrels equivalent a day of oil and gas last year, as against almost 4 million in 2009. The company's current market capitalisation of $114 billion was more than a third lower than prior to the disaster.
According to BP the charge was likely the last major expense related to the Gulf oil disaster after six years of mounting costs.
Remaining oil spill costs were not expected to have a "material impact" on the financial performance of the global group, the company said.
The UK oil giant had avoided giving a total corporate cost of the April 2010 Deepwater Horizon rig explosion and ensuing oil spill in light of increasing costs. Eleven men perished in the Macondo well blowout and explosion that unleashed over 100 million gallons of oil.