BP Faces Higher 2018 Macondo Charge

UK major BP expects to pay about $1bn more this year than it forecast as the Deepwater Horizon class action winds down, it said January 16.

BP now expects to take a post-tax non-operating charge of around $1.7bn in its 4Q 2017 results for the remaining Business Economic Loss (BEL) and other claims associated with the CSSP. The cash impact is expected to be spread over a multi-year period.

The charge results primarily from significantly higher claims determinations issued by the court in the fourth quarter and the continuing effect of the Fifth Circuit’s adverse May 2017 ruling on the matching of revenues with expenses when evaluating BEL claims. On the basis of that, it has revised upwards its remaining liabilities.

BP CFO Brian Gilvary said that with the claims facility’s work very nearly done, the company had a good idea of what remained, and that the charge it was taking "is fully manageable within our existing financial framework, especially now that we have the company back into balance at $50/barrel.”

Cash payments related to the Deepwater Horizon's Macondo well disaster in April 2010, due in 2018, are now anticipated to be around $3bn, including some of that $1.7bn, against the company’s 3Q 2017 estimate of just over $2bn.  BP said it would continue to vigorously appeal determinations of claims that it believes are non-compensable under the Plaintiffs’ Steering Committee settlement agreement.