Deal seen as positive for company
BP shares rise following £12bn final settlement on Gulf oil spill
More than 125 million gallons of oil poured into the Gulf after an explosion at the Deepwater Horizon rig which left 11 workers dead.
Shares in the company rose strongly after the company announced the largest corporate settlement in US history which adds to the £28bn that BP had previously set aside for criminal and civil penalties and cleanup costs. It takes the total cost of the spill to at £34.5bn.
BP shares leapt 4.35% in London and by more than 5% in New York as investors saw the deal as drawing a line under the crisis and creating certainty over the company’s liabilities.
The fine is seen as punitive but manageable. It equates to its annual capital expenditure and will payments will spread over as many as 18 years.
BP will pay £8.2bn for breaches of the Clean Water Act fines and natural resource damages, plus £3.1bn to the states affected.
The Deepwater Horizon rig explosion on 20 April 2010 was the worst offshore oil disaster in US history, polluting the waters and shoreline of the southern states of Alabama, Florida, Louisiana, Mississippi and Texas.
The agreement, which still needs to be approved by courts, covers Clean Water Act fines and natural resources damages, along with claims by as well as 400 local government entities.
BP chief executive Bob Dudley said: “This is a realistic outcome which provides clarity and certainty for all parties. For BP, this agreement will resolve the largest liabilities remaining from the tragic accident.
“For the United States and the Gulf in particular, this agreement will deliver a significant income stream over many years for further restoration of natural resources and for losses related to the spill.”