BP settlement: Anadarko adds $4 billion to pay spill claims
BP settlement with Anadarko reduces chances of punitive damages for 2010 Gulf spill. Despite BP settlement, other lawsuits and fines still loom for oil giant.
Anadarko Petroleum Co. has agreed to pay $4 billion to BP PLC as part of a settlement related to last year's Gulf of Mexico oil spill, adding weight to BP's contention that it was not solely responsible for the disaster.
BP said Monday that Anadarko's payment will form part of the British company's $20 billion trust fund, which has paid out $7 billion so far to settle claims from individuals and businesses. Eleven workers were killed when the Deepwater Horizon rig at the Macondo well exploded off Louisiana on April 20, 2010, causing the largest oil spill in U.S. history.
BP has now reached settlements with both of its partners in the Macondo well.
However, it is still embroiled in lawsuits and countersuits with Transocean Ltd., operator of the Deepwater Horizon drilling rig, and Halliburton Co., which was responsible for cementing the well. The suits are scheduled to go to trial in New Orleans in February.
BP also faces the prospect of fines in the tens of billions of dollars.
The market cheered the Anadarko's BP settlement, pushing BP shares 4 percent higher at 433 pence in early afternoon trading on the London Stock Exchange.
"If the group is not found grossly negligent, fines relating to the incident would be a basic amount of $1,100 per barrel, as opposed to $4,300 per barrel if found guilty, Jackson said, adding that the not-guilty verdict would still cost the company $15.7 billion.
BP has made provisions for up to $42 billion in costs from the blowout, and it has embarked on raising $30 billion by selling assets.
Anadarko, based in The Woodlands, Texas, is handing over its 25 percent stake in the well to BP as part of the settlement.
The agreement also gives Anadarko a potential share in funds which BP recovers from third parties or insurance. If BP's total recovery exceeds $1.5 billion, Anadarko would get 12.5 percent of the excess, or up to $1 billion, BP said.
"This settlement agreement with BP is the right action for our stakeholders, as it removes significant uncertainty regarding future liabilities and associated risks," said Jim Hackett, chairman and CEO of Anadarko.
"This settlement represents a positive resolution of a significant uncertainty and it resolves the issues among all the leaseholders of the Macondo well," said BP Chief Executive Bob Dudley.
"There is clear progress with parties stepping forward to meet their obligations and help fund the economic and environmental restoration of the Gulf," Dudley said. "It's time for the contractors, including Transocean and Halliburton, to do the same."
In May, BP announced a settlement with the other partner in the well, MOEX Offshore 2007 LLC, which owned 10 percent it. That company agreed to pay BP $1 billion.
Weatherford International Inc., a contractor based in Switzerland, also agreed in June to pay $75 million to the trust fund to settle claims between it and BP. Weatherford manufactured the float collar, designed to help contain cement, used in the blown-out well.
U.S. regulators last week cited BP PLC, Transocean Lld. and Halliburton for alleged safety and environmental violations stemming from last year's rig explosion and massive Gulf oil spill.
The companies were given 60 days to appeal the citations issued by the U.S. Interior Department's Bureau of Safety and Environmental Enforcement.
A report issued last month by the panel of government investigators laid ultimate responsibility on BP for the disaster, which spewed roughly 200 million gallons (750 million liters) of oil into the Gulf.
BP ignored crucial warnings and made bad decisions during the cementing of the well, but Transocean and Halliburton shared some of the blame, the report concluded.
In its asset disposal program, BP has announced at least 15 sales including:
—A bundle of onshore gas assets to Apache Corp. for $7.1 billion.