BP has closed off another of the outstanding legal liabilities from the 2010 Deepwater Horizon disaster, agreeing a settlement to resolve claims from investors that could have reached $2.5 billion.
Investors who bought BP’s US-listed American Depositary Shares after the explosion on the Deepwater Horizon rig on April 20 2010, but before the full scale of the spill had become apparent, had sued the company in a federal court in Houston for the losses they suffered. BP shares plunged as the estimates of the rate at which oil was flowing from the well were increased.
The trial was scheduled to start next month, but on Thursday BP said it would pay $175 million to those investors to settle their claims. The payments will be made in 2016-17.
The settlement agreement does not cover other actions brought by shareholders against BP, including claims under English law that are being heard in Houston.
The shareholders who brought the action over share purchases after the explosion argued that in the first few weeks after the accident, BP had concealed its knowledge about the scale of the leak from the ruptured well on the sea bed.
In 2012 the company agreed a $525 million settlement with the Securities and Exchange Commission, which said BP had "made fraudulent public statements" indicating that 5,000 barrels of oil per day were escaping from the well into the waters of the Gulf, even though its own internal data were indicating the potential rate could be as high as 146,000 b/d.
The $175 million for the settlement will be added to the provisions that BP has set aside for the spill, as the cost of shareholders actions had not previously been an item that BP could value.
As of the end of the first quarter of this year, BP had set aside $56.4 billion for the cost of the spill, including the clean-up restoration, official penalties and damages.
Most of the largest items in the cost have now been accounted for, although BP is still facing some remaining outstanding liabilities. In particular, there is a steadily rising charge for compensation for lost earnings claimed by businesses in the Gulf of Mexico region under the settlement that BP agreed with plaintiffs’ lawyers in 2012.
– Copyright The Financial Times Limited 2016
