BP will pay $18.7 billion to settle all claims related to the 2010 oil spill

BP is done with Deepwater Horizon settlements.

On Friday, the company agreed to an $US18.7 billion settlement with the US and several Gulf Coast states related to the 2010 incident.

In pre-market trade on Friday, shares of BP were up as much as 5% following the news.

On Friday, the company announced that its US upstream unit — BP Exploration and Production, or BPXP — has, in principle, agreed to settle all federal and state claims related to the event.

The payments break down as:

  • BPXP is to pay the United States a civil penalty of $US5.5 billion under the Clean Water Act (CWA) – payable over 15 years.
  • BPXP will pay $US7.1 billion to the United States and the five Gulf states over 15 years for natural resource damages (NRD). This is in addition to the $US1 billion already committed for early restoration. BPXP will also set aside an additional amount of $US232 million to be added to the NRD interest payment at the end of the payment period to cover any further natural resource damages that are unknown at the time of the agreement.
  • A total of $US4.9 billion will be paid over 18 years to settle economic and other claims made by the five Gulf Coast states.
  • Up to $US1 billion will be paid to resolve claims made by more than 400 local government entities.

In a statement, the company said that the impact of these agreements will increase the cumulative pre-tax charge associated with this event to $US53.8 billion from $US43.8 billion.

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