BP Has Around $14B After Tax to Cover US Civil Fines, Claims

LONDON - BP PLC has headroom of around $14 billion after tax credits to cover Clean Water Act fines as well as other claims and litigation costs stemming from its April 2010 Deepwater Horizon disaster in the U.S. Gulf that aren't payable from its $20 billion trust fund, ratings agency Moody's said Monday.

Although BP's financial results weakened in 2012, additional divestment proceeds should allow the company to absorb cumulative costs of up to $40 billion after tax, and retain its A2 rating, the agency said in a report.

However, considerable financial uncertainty will continue to weigh on the U.K. energy giant until the size of the ultimate financial liabilities arising from the disaster are known, Moody's said.

The first phase of a civil trial on Deepwater Horizon is scheduled to begin later Monday before a federal judge in New Orleans. The first stage will determine who was responsible for the accident and whether BP and other defendants acted with gross negligence. The second phase, which is likely to start in September, will determine how much oil was spilled.

The trial won't rule on the amount of the penalties and awards to claimants. That would be determined at a separate trial at a later date, probably not before 2014, Moody's said.

To date BP has spent a total of $37.2 billion pre-tax, which is equivalent to $26.1 billion after tax, on costs arising from the 2010 disaster, Moody's said.

Moody's said it expects BP's cash flows to strengthen from 2014 onwards as it begins to reap the benefits of the large roster of upstream projects that it is working on, many of which are based in high-margin regions.

This would help strengthen the group's credit metrics relative to their weaker positioning expected in 2013.

Copyright (c) 2012 Dow Jones & Company, Inc.

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BP to 'Vigorously' Defend Itself in Deepwater Horizon Civil Trial

BP insisted Tuesday that it will defend itself "vigorously" against gross negligence allegations during the Deepwater Horizon civil liability trial, which starts next Monday.

The first phase of the civil trial – to be held in the U.S. District Court for the Eastern District of Louisiana – will be focused on the causes of the Deepwater Horizon accident and will examine who should be held responsible and to what degree.

"We have always been open to settlements on reasonable terms, failing which we have always been prepared to defend our case at trial. Faced with demands that are excessive and not based on reality or the merits of the case, we are going to trial," said Rupert Bondy, Group General Counsel of BP. "We have confidence in our case and in the legal team representing the company and defending our interests."

The court will ultimately determine whether BP or any other party was grossly negligent, but BP strongly disputes this charge.

"Gross negligence is a very high bar that BP believes cannot be met in this case,” said Mr Bondy. “This was a tragic accident, resulting from multiple causes and involving multiple parties. We firmly believe we were not grossly negligent."

Last November, BP and the U.S. government agreed to resolve all Federal charges and all Securities and Exchange Commission claims connected to the April 2010 disaster in return for $4.5 billion settlement paid by BP.

As part of the deal, BP agreed to plead guilty to 11 felony counts of "misconduct or neglect of ships officers" relating to the loss of the lives of 11 people as a result of the accident. It also agreed to plead guilty to one misdemeanor count under the Clean Water Act, one misdemeanour count under the Migratory Bird Treaty Act and one felony count of obstruction of Congress.

The Deepwater Horizon explosion on April 20, 2010 resulted in the largest offshore spill in U.S. history.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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BP to 'Vigorously' Defend Itself in Deepwater Horizon Civil Trial

BP insisted Tuesday that it will defend itself "vigorously" against gross negligence allegations during the Deepwater Horizon civil liability trial, which starts next Monday.

The first phase of the civil trial – to be held in the U.S. District Court for the Eastern District of Louisiana – will be focused on the causes of the Deepwater Horizon accident and will examine who should be held responsible and to what degree.

"We have always been open to settlements on reasonable terms, failing which we have always been prepared to defend our case at trial. Faced with demands that are excessive and not based on reality or the merits of the case, we are going to trial," said Rupert Bondy, Group General Counsel of BP. "We have confidence in our case and in the legal team representing the company and defending our interests."

The court will ultimately determine whether BP or any other party was grossly negligent, but BP strongly disputes this charge.

"Gross negligence is a very high bar that BP believes cannot be met in this case,” said Mr Bondy. “This was a tragic accident, resulting from multiple causes and involving multiple parties. We firmly believe we were not grossly negligent."

Last November, BP and the U.S. government agreed to resolve all Federal charges and all Securities and Exchange Commission claims connected to the April 2010 disaster in return for $4.5 billion settlement paid by BP.

As part of the deal, BP agreed to plead guilty to 11 felony counts of "misconduct or neglect of ships officers" relating to the loss of the lives of 11 people as a result of the accident. It also agreed to plead guilty to one misdemeanor count under the Clean Water Act, one misdemeanour count under the Migratory Bird Treaty Act and one felony count of obstruction of Congress.

The Deepwater Horizon explosion on April 20, 2010 resulted in the largest offshore spill in U.S. history.

A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com.

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US Judge OKs Transocean's $1B Civil Spill Settlement

A New Orleans judge has approved Transocean Ltd.'s settlement agreement with the Justice Department to pay $1 billion in civil penalties for its part in the 2010 Macondo oil spill in the Gulf of Mexico.

U.S. District Judge Carl Barbier stated in his ruling Tuesday that there is "no just reason for delay" in approving the civil settlement, The Associated Press reported.

"We are not commenting on this piece - we will let the settlement speak for itself," said Lou Colasuonno, spokesperson for Transocean, in an exclusive Rigzone phone interview.

Another U.S. federal judge approved Transocean's $400 million criminal settlement Feb. 14, in which the company pleaded guilty to a misdemeanor charge, resulting in one of the largest criminal Clean Water Act fines and penalties in U.S. history.
In total, Transocean will pay $1.4 billion in criminal and civil penalties.

Transocean, which employed nine of the 11 workers killed in the accident, owned the Deepwater Horizon drilling rig that exploded and sank over BP's Macondo well in April 2010.

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

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US Judge OKs Transocean's $1B Civil Spill Settlement

A New Orleans judge has approved Transocean Ltd.'s settlement agreement with the Justice Department to pay $1 billion in civil penalties for its part in the 2010 Macondo oil spill in the Gulf of Mexico.

U.S. District Judge Carl Barbier stated in his ruling Tuesday that there is "no just reason for delay" in approving the civil settlement, The Associated Press reported.

"We are not commenting on this piece - we will let the settlement speak for itself," said Lou Colasuonno, spokesperson for Transocean, in an exclusive Rigzone phone interview.

Another U.S. federal judge approved Transocean's $400 million criminal settlement Feb. 14, in which the company pleaded guilty to a misdemeanor charge, resulting in one of the largest criminal Clean Water Act fines and penalties in U.S. history.
In total, Transocean will pay $1.4 billion in criminal and civil penalties.

Transocean, which employed nine of the 11 workers killed in the accident, owned the Deepwater Horizon drilling rig that exploded and sank over BP's Macondo well in April 2010.

With more than 10 years of journalism experience, Robin Dupre specializes in the offshore sector of the oil and gas industry. Email Robin at rdupre@rigzone.com.

Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

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