BP to pay US$18.7bn for Gulf oil spill

[webfact]

$18.7B deal clears path for BP to close books on Gulf spill
By KEVIN McGILL, REBECCA SANTANA and MICHAEL KUNZELMAN

NEW ORLEANS (AP) — Trying to close the books on the worst offshore oil spill in U.S. history, BP agreed Thursday to provide billions of dollars in new money to five Gulf Coast states in a deal the company said would bring its full obligations to an estimated $53.8 billion.

Federal and state government officials touted the record-breaking $18.7 billion agreement as a historic milestone in the Gulf Coast's recovery. The Deepwater Horizon disaster killed 11 rig workers and spewed millions of gallons of crude that stained beaches, coated wildlife and polluted marshes.

BP also gets a valuable return: Much of the payments, to be made over the next 18 years, could be tax-deductible. And by finally providing shareholders with a clearer cost picture, the London-based oil giant will be freer to embark on new ventures.

"This allows us to manage BP as an oil company," BP CEO Bob Dudley said during a conference call. He said BP could launch as many as 20 major new projects by 2020, depending on oil prices.

The Justice Department said Thursday's agreement would be the largest environmental settlement in U.S. history as well as the largest-ever civil settlement with a single entity. Civil claims by the five Gulf states and the federal government were, by far, the largest unresolved piece of BP's financial obligations for the spill.

BP's total spill-related cost estimate also includes roughly $29 billion on response and cleanup expenses and compensation for Gulf Coast businesses and residents.

"It's time for the company to move on," said Brian Youngberg, an energy analyst for Edward Jones. "It's definitely a win for BP. No company can really do well when you have such a big litigation issue hanging over it."

In 2012, BP reached a similar settlement agreement with private attorneys for businesses and residents who claim the spill cost them money. That deal, which didn't have a cap, led to a protracted court battle over subsequent payouts to businesses. A court-supervised claims administrator is still processing many of these claims.

The broad outlines of the deal were described in Thursday's court filing, but a confidentiality order is keeping the fine print under seal. Eventually, there will be a public comment period on the agreement's merits before a federal judge decides whether to accept it, the Justice Department said.

U.S. District Judge Carl Barbier, who presided over a three-phased trial, already found BP grossly negligent in the nearly 134 million-gallon spill.

While analysts praised the announcement, some environmental advocates complained that government officials should have held out for more money.

"If the court approves this proposal, BP will be getting off easy and 'we the people' will not be fully compensated for the natural resource damages that we suffered, and the law requires that the public is made whole for those damages," said Jacqueline Savitz, U.S. vice president for Oceana, a group dedicated to protecting the world's oceans.

Investors pushed BP shares up 5 percent in late afternoon trading. The Fitch rating firm said the deal will "considerably strengthen" BP's credit profile and would likely lead to an upgrade if approved.

By staggering payments over 18 years, the deal would enable BP to pay dividends to shareholders and have enough financial flexibility for future deals and projects. The total is larger than BP had provisioned for, but without a settlement, the company faced still-larger Clean Water Act penalties.

David Uhlmann, a University of Michigan law professor and former chief of the Justice Department's environmental crimes section, said BP's total price tag is "staggering" but includes many tax-deductible costs. "Settlements always involve trade-offs and compromises, and this one is no different," Uhlmann said.

The criminal and civil penalties BP has agreed to pay are not tax-deductible, but restitution and other business expenses often are.

U.S. Attorney General Loretta Lynch said the settlement "would bring lasting benefits to the Gulf region for generations to come." The deal includes $8.1 billion in payments to state and local governments in Alabama, Florida, Louisiana, Mississippi and Texas for natural resource damage. It also includes a $5.5 billion Clean Water Act penalty, most of which the states would share.

Louisiana suffered most of the spill's environmental impact and would get the largest share, about $6.8 billion.

Louisiana Attorney General Buddy Caldwell said litigation could have dragged on for years, delaying the state's recovery. "Today's settlement is a game-changer for Louisiana, its communities and its families," he said.

The agreement only leaves a handful of relatively minor loose ends for BP, including claims by people who either opted out or were not covered by 2012 settlement with private lawyers.

The April 2010 blowout of BP's Macondo well also spawned a federal criminal probe that resulted in manslaughter charges against two rig supervisors whose trial is set for next year.
___

Contributors include Associated Press reporters Jonathan Fahey in New York; Melinda Deslatte in Baton Rouge, Louisiana; Emily Wagster Pettus in Jackson, Mississippi; Tamara Lush in Tampa, Florida; and Kim Chandler in Montgomery, Alabama.


-- (c) Associated Press 2015-07-03

[ABCer]

Pity non of this money will reach poor Mexican fishermen who can't catch enough even to eat.

I saw in the News they are collectively demanding $1,25 billion in lost income.

[impulse]

Pity non of this money will reach poor Mexican fishermen who can't catch enough even to eat.

I saw in the News they are collectively demanding $1,25 billion in lost income.

Doesn't even come close to the decades of damage done to US interests by the Mexican state oil company's Ixtoc spill, for which the US interests were not allowed to collect...

Let them collect from Pemex.

I suspect the real reason Mexican fishermen "can't catch enough to eat" is similar to the reason Thai fishermen can't catch enough to afford paid labor- they have overfished to the point of collapse (with the help of a blind eye $$$ toward illegal Asian fishing boats). And now they want to blame someone with deep pockets.

Edited July 4, 2015 by impulse

[Thongkorn]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

[tx22cb]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

"americas is anti British anyway"

Sorry, have to take you to task on this assertion.

In my experience, we Americans regard the Brits (and the Irish!) with greater respect and civilty than the Brits regard Americans.

Walk into any bar in the US, and most people will have warm feelings for Britain/Brits.

Walk into most pubs in the UK, and there'll be more negative comments on America/Americans.

[englishoak]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

"americas is anti British anyway"

Sorry, have to take you to task on this assertion.

In my experience, we Americans regard the Brits (and the Irish!) with greater respect and civilty than the Brits regard Americans.

Walk into any bar in the US, and most people will have warm feelings for Britain/Brits.

Walk into most pubs in the UK, and there'll be more negative comments on America/Americans.

Really ?

39 percent of the company is owned by American shareholders and six Americans – half the total – sit on its board of directors.

The company’s single largest shareholder is the sprawling asset management firm BlackRock, based in New York City, which owned the equivalent of more than one billion shares of BP stock just two weeks before the Deepwater Horizon blowout, according to the financial analysis firm Capital IQ. (Bank of America owns a 34.1 percent stake in BlackRock.)

The second-largest American owner, and third largest over all, isState Street Global Advisors, based in Boston, with 307 million shares. After them are the mutual fund firm Capital Research and Management Company of Los Angeles, with 247 million shares, and the Vanguard Group, based in Malvern, Pa., with 140 million shares. Rounding out the top five is Franklin Resources of San Mateo, Calif., another publicly owned asset management firm, with 131 million shares.

More familiar names crop up further down the list, like Fidelity Investments, with 124 million shares; T. Rowe Price Group, with 93 million shares; and State Farm Insurance, with 79 million shares.

Then there are the banks: as of March 31, JPMorgan Chase held a respectable 76 million shares; Bank of America, 69 million shares; and Goldman Sachs, 42 million shares.

The Bill & Melinda Gates Foundation is another a major investor, with nearly 43 million shares.http://green.blogs.nytimes.com/2010/06/14/just-how-british-is-bp/?_r=0

BP isnt British its big business that has no loyalty like all big business so do please drop the stupid flag waving guys you sound pathetic

Edited July 4, 2015 by englishoak

[chuckd]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

The US company, Union Carbide, paid some $470 Million in 1989 to settle lawsuits.

They were minority shareholders in an Indian owned and managed company.

[IMA_FARANG]

Pity non of this money will reach poor Mexican fishermen who can't catch enough even to eat.

I saw in the News they are collectively demanding $1,25 billion in lost income.

----------------------------

That is true.

The reason is that this case was filed in the U.S.A. which has no jurisdiction in Mexico but only for the U.S Gulf states.

The Mexican government is thinking of filing there own case for the Mexican fisherman.

If they do then the "settlement" is not over with yet.

[stevenl]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

The US company, Union Carbide, paid some $470 Million in 1989 to settle lawsuits.

They were minority shareholders in an Indian owned and managed company.

Yes, they paid 470 million US$, but no, they were not minority shareholders. Union Carbide Corporation owned 50.9% of Union Carbide India.

[chuckd]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

The US company, Union Carbide, paid some $470 Million in 1989 to settle lawsuits.

They were minority shareholders in an Indian owned and managed company.

Yes, they paid 470 million US$, but no, they were not minority shareholders. Union Carbide Corporation owned 50.9% of Union Carbide India.

You are correct and I mistakenly read the ownership incorrectly.

My mistake and thanks for the correction.

[up-country_sinclair]

$18.7B deal clears path for BP to close books on Gulf spill

What this deal does is clear the path for a potential takeover of BP by one of the larger oil companies: Exxon, Shell, Chevron.

All of the firms listed below will profit quite handily if/when that comes to pass.

The company’s single largest shareholder is the sprawling asset management firm BlackRock, based in New York City, which owned the equivalent of more than one billion shares of BP stock just two weeks before the Deepwater Horizon blowout, according to the financial analysis firm Capital IQ. (Bank of America owns a 34.1 percent stake in BlackRock.)

The second-largest American owner, and third largest over all, isState Street Global Advisors, based in Boston, with 307 million shares. After them are the mutual fund firm Capital Research and Management Company of Los Angeles, with 247 million shares, and the Vanguard Group, based in Malvern, Pa., with 140 million shares. Rounding out the top five is Franklin Resources of San Mateo, Calif., another publicly owned asset management firm, with 131 million shares.

More familiar names crop up further down the list, like Fidelity Investments, with 124 million shares; T. Rowe Price Group, with 93 million shares; and State Farm Insurance, with 79 million shares.

Then there are the banks: as of March 31, JPMorgan Chase held a respectable 76 million shares; Bank of America, 69 million shares; and Goldman Sachs, 42 million shares.

The Bill & Melinda Gates Foundation is another a major investor, with nearly 43 million shares.http://green.blogs.n...ish-is-bp/?_r=0

[Soutpeel]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

"americas is anti British anyway"

Sorry, have to take you to task on this assertion.

In my experience, we Americans regard the Brits (and the Irish!) with greater respect and civilty than the Brits regard Americans.

Walk into any bar in the US, and most people will have warm feelings for Britain/Brits.

Walk into most pubs in the UK, and there'll be more negative comments on America/Americans.

Lets put a slightly different perspective on this, What was obviously during this Oil Spill, the US media was playing a "British company caused this" angle to the hilt, thereby creating the impression to its viewers that this was a foreign company, while at the same time waving the "Star's and Stripes"

I remember even thinking this at time while watching the news reports

What we can say for certain, if it was a "wholly owned" US company involved in this eg your Exxon/Mobil's etc., then one suspects the responses would have been different in the media/public opinion/politicians

[Soutpeel]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

The US company, Union Carbide, paid some $470 Million in 1989 to settle lawsuits.

They were minority shareholders in an Indian owned and managed company.

Yes, they paid 470 million US$, but no, they were not minority shareholders. Union Carbide Corporation owned 50.9% of Union Carbide India.

Wasn't there also an extradition order on one of the Union Carbide executives as they wanted him in India to stand trial ?

[gk10002000]

$18.7B deal clears path for BP to close books on Gulf spill

What this deal does is clear the path for a potential takeover of BP by one of the larger oil companies: Exxon, Shell, Chevron.

All of the firms listed below will profit quite handily if/when that comes to pass.

The company’s single largest shareholder is the sprawling asset management firm BlackRock, based in New York City, which owned the equivalent of more than one billion shares of BP stock just two weeks before the Deepwater Horizon blowout, according to the financial analysis firm Capital IQ. (Bank of America owns a 34.1 percent stake in BlackRock.)

The second-largest American owner, and third largest over all, isState Street Global Advisors, based in Boston, with 307 million shares. After them are the mutual fund firm Capital Research and Management Company of Los Angeles, with 247 million shares, and the Vanguard Group, based in Malvern, Pa., with 140 million shares. Rounding out the top five is Franklin Resources of San Mateo, Calif., another publicly owned asset management firm, with 131 million shares.

More familiar names crop up further down the list, like Fidelity Investments, with 124 million shares; T. Rowe Price Group, with 93 million shares; and State Farm Insurance, with 79 million shares.

Then there are the banks: as of March 31, JPMorgan Chase held a respectable 76 million shares; Bank of America, 69 million shares; and Goldman Sachs, 42 million shares.

The Bill & Melinda Gates Foundation is another a major investor, with nearly 43 million shares.http://green.blogs.n...ish-is-bp/?_r=0

I own 1817 shares. But I am happy that my ~ $75,000 USD investment is looking better. I bought because of the dividend and the low price the last few years.

[stevenl]

Ironic that it was an American company that caused it with faulty gear, But americas is anti British anyway. i cannot remember America paying indian Bowpa.l

The US company, Union Carbide, paid some $470 Million in 1989 to settle lawsuits.

They were minority shareholders in an Indian owned and managed company.

Yes, they paid 470 million US$, but no, they were not minority shareholders. Union Carbide Corporation owned 50.9% of Union Carbide India.

Wasn't there also an extradition order on one of the Union Carbide executives as they wanted him in India to stand trial ?

There was a request for him to come and stand trial, he refused. I don't think there was ever an extradition request.