BP’s Deepwater Horizon Bill Tops $62 Billion

Published at 01:49PM - 15/07/16

BP announced it now has reliable estimates of all the remaining material liabilities in connection with the Deepwater Horizon accident.

According to the supermajor, following significant progress in resolving outstanding claims arising from the 2010 oil spill, the total spending reached US$2.5 billion (£1.87 billion) in the second quarter of this year.

“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 US$2.5 billion in its second quarter 2016 results”, the company said in a statement.

BP’s Major Oil Spill Cost $62bn

This charge is expected to include a pre-tax non-operating charge associated with the oil spill of approximately US$5.2 billion (£3.89 billion), bringing the total cumulative pre-tax charge associated with the incident to US$61.6 billion (£46.12 billion), or US$44 billion (£32.9 billion) after tax.

Deepwater Horizon Oil Rig Disaster

According to BP, any further outstanding claims related to the Deepwater Horizon accident that were not covered by this additional charge will not have any material impact on the financial performance of the group.

BP Uses Divestments to Pay for Oil Spill Costs

“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”, BP Chief Financial Officer Brian Gilvary, said.

The CFO reconfirmed that BP expects to continue using proceeds of divestments to meet Deepwater Horizon commitments in line with the financial framework laid out in previous quarters.

Deepwater Horizon was an ultra-deep water semi-submersible offshore oil drilling rig owned by Transocean and leased to BP.

While it was drilling the Macondo prospect in April 2010, an explosion on the rig caused by a blowout killed 11 crewmen and ignited a fireball visible from 40 miles.

The resulting fire took two days to be extinguished, causing the largest ever oil spill in US waters.