The ultimate costs from the Macondo well blowout in the deepwater Gulf of Mexico six years ago, already considered the costliest environmental disaster in history, have reached $61.6 billion, BP plc said Thursday.
The blowout in April 2010 killed 11 men and destroyed the Deepwater Horizon platform. The tragedy sent oil spewing from the well for 87 days and idled U.S. offshore activity for about six months (see Daily GPI, March 11). Last fall BP and the Obama administration finalized a $20.8 billion settlement, the largest ever under the Clean Water Act and Oil Pollution Act, to restore the Gulf Coast economy and environment (see Daily GPI, Oct. 5, 2015).
Following "significant progress in resolving outstanding claims," BP now may "reliably estimate all of its remaining material liabilities in connection with the incident."
Taking into account the estimate together with positive tax adjustments, BP expects to take an after-tax non-operating charge of around $2.5 billion in 2Q2016 results. The charge would include a pre-tax charge associated with the oil spill of around $5.2 billion, bringing total cumulative charges to $61.6 billion or $44.0 billion after tax. BP is scheduled to issue its 2Q2016 results on July 26.
"Over the past few months we've made significant progress resolving outstanding Deepwater Horizon claims and...can estimate all the material liabilities remaining from the incident," CFO Brian Gilvary said. "Importantly, we have a clear plan for managing these costs and it provides our investors with certainty going forward."
Any further outstanding Macondo-related claims not covered by the additional charges should not have a material impact on financial performance and would be dealt with in the ordinary course of business, BP said.
BP plans to continue to use proceeds from asset sales to meet its Macondo commitments, Gilvary said.