BP Agrees To Pay $4.5B In Penalties For US Deepwater Horizon Oil Spill

on November 15 2012 12:21 PM
BP Deepwater Horizon 2010 2
BP's Deepwater Horizon rig, which sank in 2010. Reuters

BP PLC (NYSE: BP) agreed Thursday to settle criminal charges over its 2010 crude oil spill in the Gulf of Mexico by paying $4 billion to the U.S. government.

The London-based company, which agreed to plead guilty to 11 felony criminal charges and one misdemeanor charge, and to pay the Justice Dept. the money over five years, also will pay the Securities and Exchange Commission $525 million over three years to settle claims by that agency. The criminal charges are for "misconduct or neglect of ships officers."

The plea deal is subject to U.S. federal court approval, which is expected.

BP vowed to "vigorously defend itself against remaining civil claims" arising from the nearly 5 million-barrel oil spill that followed the explosion of the Deepwater Horizon semi-submersible drilling rig. The explosion and resulting fire also left 11 people dead.Further, BP will increase an existing $38.1 billion charge against earnings for the expenses by about $3.85 billion.

To cover the cost of the settlement, BP has sold more than $30 billion of assets, Reuters said. It also has already spent some $14 billion on cleanup and a further $16 billion on claims and compensation.

The settlement, which does not cover federal civil claims or various state claims -- which could cost BP billions more -- includes various preventive measures the company must take.

Specifically, BP said it agreed to take "additional actions, enforceable by the court, to further enhance the safety of drilling operations in the Gulf of Mexico." Among these additional actions are third-party auditing and verification, training, and well control equipment and processes such as blowout preventers and cementing.

"All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region," Bob Dudley, BP's group chief executive, said in a statement.

"We apologize for our role in the accident, and as today's resolution with the U.S. government further reflects, we have accepted our responsibility for our actions."

Wall Street welcomed the decision.

"It certainly is an encouraging step, Pavel Molchanov, an oil company analyst with Raymond James, told Reuters. "By eliminating the overhang of the criminal litigation, it is another step in clearing up BP's legal framework as it relates to Macondo."

Shares of BP fell seven cents in afternoon trading to $40.13.

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