BP Faces Further $2.5bn Charge Over Deepwater Horizon Disaster
BP now estimates its total costs related to the incident at $62bn and said on Thursday that, following significant progress in resolving outstanding claims arising from the 2010 Deepwater Horizon rig explosion and oil spill, it can now “reliably estimate all of its remaining material liabilities in connection with the incident.”
As a result, taking into account this estimate together with other positive tax adjustments, BP expects to take an after-tax non-operating charge of around $2.5 billion in its second quarter 2016 results.
The company said this charge is expected to include a pre-tax non-operating charge associated with the oil spill of around $5.2 billion. This would bring the total cumulative pre-tax charge relating to the Deepwater Horizon incident to $61.6 billion or $44.0 billion after tax.
BP said it believed that any further outstanding Deepwater Horizon-related claims not covered by this additional charge will not have a material impact on the Group’s financial performance. It said it would deal with remaining claims in the ordinary course of business.
Brian Gilvary, BP chief financial officer said: “Over the past few months we’ve made significant progress resolving outstanding Deepwater Horizon claims and today we can estimate all the material liabilities remaining from the incident. Importantly, we have a clear plan for managing these costs and it provides our investors with certainty going forward.”
Gilvary reconfirmed that BP expects to continue to use proceeds of divestments to meet Deepwater Horizon commitments in line with the financial framework laid out in previous quarters.
