Tags: BP | Anadarko | Gulf | Spill | oil

BP: Anadarko to Pay $4 Billion to Settle Gulf Spill Claims

Monday, 17 Oct 2011 07:04 AM

BP Plc, the operator of the Macondo well in the Gulf of Mexico that was the source of the worst U.S. oil spill last year, said Anadarko Petroleum Corp. will pay $4 billion to settle all claims over the disaster.

Anadarko, which had a 25 percent stake in the well, will no longer pursue allegations of gross negligence against BP. The payment will be made in a single cash payment and will be put in the $20 billion trust being used to repay claims and damages. Under the terms of the deal, Anadarko will transfer its stake in the Macondo well back to BP.

The Anadarko settlement will be a boost to BP as the oil company prepares for a February trial in New Orleans to establish liability for the catastrophe. BP would face higher fines if it’s found guilty of gross negligence for the spill, which pumped almost 5 million barrels of crude into the Gulf and forced the company to write off $41 billion. Rig owner Transocean Ltd. and Halliburton Co., which supplied cement for Macondo, are also defendants.

“This is likely to be seen as good news for BP and will increase pressure on Transocean and Halliburton to settle ahead of the multi-district litigation,” Oriel Securities Ltd. said in a note to clients.

BP gained as much as 5.3 percent in London trading to 430.5 pence in London trading, the highest price since August. The shares traded at 436.2 pence at 8:27 a.m. London time.

The Macondo well blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The accident and spill led to hundreds of lawsuits against BP and its partners and contractors, including multiple claims brought by vessel captains, residents and others exposed to chemicals and oil during the cleanup.

‘Clear Progress’

“There is clear progress with parties stepping forward to meet their obligations,” BP Chief Executive Officer Bob Dudley said in the statement. “It’s time for the contractors, including Transocean and Halliburton, to do the same.”

BP has now reached a settlement with both partners in the Macondo well. In May, a unit of Mitsui & Co., which had a 10 percent holding in the well, agreed to pay $1.065 billion. Based on that figure analysts had expected a settlement of between $2 billion and $3 billion for Anadarko.

Weatherford International Ltd., which provided equipment for the Macondo well, agreed to pay BP $75 million.

“The good news is that Anadarko has abandoned charges of gross negligence,” Lucy Haskins, an analyst at Barclays Capital in London, said in a phone interview. “We’re getting a drip feed of reports suggesting it was a multi-company event.”

Anadarko Cost

Anadarko will book the $4 billion cost of the settlement, equal to about $5 a share in its third-quarter earnings, it said in a separate statement. The company said it’s confident there is no further significant financial risk from the spill.

“This settlement agreement with BP is the right action for our stakeholders, as it removes significant uncertainty,” Anadarko Chairman and CEO Jim Hackett said.

Under the terms of the settlement, both parties agreed to drop claims against the other. Anadarko and BP have agreed to work together with respect to indemnified claims and Anadarko has the opportunity for a 12.5 percent participation in recoveries from third parties or insurance proceeds exceeding $1.5 billion and up to a total cap of $1 billion.

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BP Plc, the operator of the Macondo well in the Gulf of Mexico that was the source of the worst U.S. oil spill last year, said Anadarko Petroleum Corp. will pay $4 billion to settle all claims over the disaster.Anadarko, which had a 25 percent stake in the well, will no...
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Monday, 17 Oct 2011 07:04 AM
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