BP to Take $1.7 Billion Charge Over Deepwater Horizon Spill
Posted January 16, 2018 12:43 p.m. EST
LONDON — The energy giant BP said Tuesday that it expected to take an additional charge of $1.7 billion in the fourth quarter for claims related to the 2010 Deepwater Horizon disaster, which killed 11 people and caused the worst oil spill in U.S. history.
The company also said that it now anticipated that cash payments related to the disaster to be about $3 billion this year, up from an estimate issued in the third quarter of more than $2 billion.
“With the claims facility’s work very nearly done, we now have better visibility into the remaining liability,” Brian Gilvary, BP’s chief financial officer, said in a news release. “The charge we are taking as a result is fully manageable within our existing financial framework.”
The explosion of the Deepwater Horizon oil rig was one of the worst environmental disasters in U.S. history, spilling millions of gallons of crude oil into the Gulf of Mexico. It badly damaged BP’s reputation and has cost the company tens of billions of dollars in fines and settlements.
The charge announced Tuesday is related to a court-supervised settlement program after a class-action lawsuit to resolve claims for business losses and other claims related to the oil spill.
The company said this month that it would take a separate noncash charge of about $1.5 billion in the fourth quarter related to a tax overhaul in the United States but said it expected its future U.S. earnings to be “positively impacted” by the changes, which lowered the corporate income tax rate.
The Deepwater Horizon disaster led to a series of new safety regulations for offshore oil drilling, which the Trump administration is preparing to roll back in hopes of generating more domestic energy production.
The Interior Department’s Bureau of Safety and Environmental Enforcement said in December that the decrease in regulations would reduce “unnecessary burdens” on the energy industry and save the sector $228 million over 10 years.
This month, the Trump administration said that it would allow new offshore oil and gas drilling in nearly all U.S. coastal waters, reversing environmental policies put in place by the Obama administration.
Last week, however, the White House backed off opening up more drilling off the coast of Florida after strong opposition from the state’s Republican governor, Rick Scott. Governors in other coastal states have now asked for their own exemptions to the offshore drilling expansion.