BP to pay $175m to investors over Deepwater Horizon spill

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BP has agreed to pay $175m (£120m) to settle claims that it deceived shareholders by underplaying the severity of the 2010 Gulf of Mexico oil spill.

The settlement, to be paid this year or next, ends a legal battle that began when a Houston judge ruled investors who bought shares shortly after the explosion at its Deepwater Horizon rig could sue BP.

Their claim was based on the allegation that BP publicly “lowballed” the amount of oil flowing from its Macondo well into the Gulf of Mexico.

Company officials stated that between 1,000 and 5,000 barrels of oil were leaking into the Gulf per day, when internal estimates suggested the true figure was 10 times higher.

Shares later plummeted when the true scale of the disaster was revealed.

Claimants who signed up to the class action suit were seeking as much as $2.5bn. BP shares rose more than 2% in morning trading after the much smaller settlement was revealed.

The settlement was limited by an earlier ruling from US district judge Keith Ellison, which narrowed the number of statements made by BP that could be said to have affected the company’s share price.

This earlier ruling is thought to have hastened the settlement because it would have benefited BP had the case gone to trial as planned in July.

In 2012, BP paid $525m to settle claims from the Securities and Exchange Commission, the US financial regulator, that it misled the markets over the size of the spill.

In a written statement, BP said: “In May 2014, the federal district court certified a class of post-explosion ADS purchasers in the MDL 2185 securities litigation.

“BP and representatives of the post-explosion class have agreed to settle these class claims for the amount of $175m, payable during 2016-2017, subject to approval by the court.

“This settlement does not resolve other securities-related litigation in connection with the Gulf of Mexico oil spill.

About 4.9m barrels of crude oil leaked into the Gulf after the Deepwater Horizon rig exploded, killing 11 people. It is the worst spill in US history.

BP has so far set aside $56.4bn to cover the cost of settlements, fines and clean-up costs.

The total cost includes a $4bn settlement of criminal charges, an estimated $12.9bn for businesses and individuals who claim the spill cost them money and an $18.7bn environmental settlement with the US government and five states.

BP also estimates that the cost of responding to the spill and the oil clean-up reached $14bn.

Powered by Guardian.co.ukThis article was written by Rob Davies, for theguardian.com on Friday 3rd June 2016 11.14 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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