BP Agrees To Pay Gulf Oil Spill Claims

Published at 09:11AM - 03/06/16

Oil supermajor BP has reached an agreement to pay US$175 million (£121.37 million) to settle claims by shareholders that the company had played down the severity of the 2010 Gulf of Mexico oil spill.

According to BP, the claims will be paid during 2016-2017.

However, the settlement does not cover other actions brought by shareholders against the company in connection with the incident on the Deepwater Horizon rig which took place on April 20.

BP Agrees To Pay Gulf Oil Spill Claims

The announcement, made on Thursday, follows a ruling by US District Judge Keith Ellison, to narrow the evidence that could have been presented to a jury.

Ellison had allowed the class-action lawsuit to be pursued in 2014, saying that BP had publicly “lowballed” the oil flow rate and that the stock price “did not reflect the magnitude of the disaster facing the company”, Reuters reported at the time.

Following the ruling, the shareholders who bought BP’s American depositary shares after the incident, but before the scale of the spill was fully disclosed, sued the company for the losses they suffered.

Shares Fell By 40% After The spill

The shareholders argued that, during the first weeks of the spill, BP did not fully disclose the information they had about the magnitude of the leak and this had a severe effect over the stock price.

As soon as the estimates on the rate of oil flow produced from the spill were updated, the company’s shares suffered a hard hit, plunging in excess of 40%.

In a separate legal action, the company received final approval for a different settlement, to pay up to US$18.7 billion (£12.97 billion) in penalties to the US government and five states.

The explosion was the worst offshore oil disaster in US history, with 11 deaths and millions of barrels spilled for nearly three months.