BP will take a US$1.7-billion post-tax impairment charge on expenses related to the finalization of settlements related to the 2010 Deepwater Horizon disaster. The charge will be booked in the company's fourth-quarter report, CFO Brian Gilvary said today. The charge concerns a class action suit by businesses affected economically by the spill.
The amount of this charge, Gilvary said, is completely manageable now that BP has lowered its breakeven point to US$50 a barrel and has boosted its available cash.
Payments on settlements will amount to US$3 billion this year, which is more than the previously estimated US$2 billion, but said Gilvary, BP will continue to appeal settlements that the company believes have no actual merit.
The 2010 Deepwater Horizon explosion that cost 11 lives and the spill of millions of barrels of crude into the Gulf of Mexico in what is the largest environmental disaster in the history of the oil industry in the U.S., has cost BP a total US$62 billion, as of 2016 calculations. The after-tax figures came in at around US$44 billion. The company was found by a New Orleans judge to have been grossly negligent in its handling of the disaster. Related: The Labor Shortage In The Shale Boom
There were tens of thousands of cases against the supermajor following the accident, most of which have been settled.
Despite the huge bill, BP has recovered quite well, supported by higher oil prices last year. At the end of 2017, in an interview with the Financial Times, CEO Bob Dudley said 2017 had been a turning point for the company after the Deepwater Horizon disaster. "It feels like we are now dealing with the same problems that everyone else has," he said.
The company has continued to invest in large-scale projects and to improve efficiencies to lower its breakeven point, and it has boasted a 40-percent decline in its production costs since 2014. Its production last year averaged 3.6 million bpd.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More