Remaining Deepwater Horizon Costs Will Total $61.6 Billion

The British oil giant said that figure includes a new $5.2 billion pre-tax charge on the company’s second-quarter earnings, covering the costs of certain business and economic loss claims and a securities settlement.

The oil spill in the Gulf of Mexico resulted from an explosion in Transocean’s Deepwater Horizon drilling rig, which was working under contract for BP in the Macondo prospect in April 2011.

The company expects an after-tax non-operating charge of around $2.5 billion, which will be reported in its second-quarter 2016 results.

“BP believes that any further outstanding Deepwater Horizon-related claims not covered by this additional charge will not have a material impact on the Group’s financial performance”, the oil major said in the statement, adding that it would deal with remaining claims in the ordinary course of business.

Getty Images A worker uses a vacuum hose to capture some of the oil washing on to Fourchon Beach from the Deepwater Horizon oil spill in the Gulf of Mexico on June 28, 2010 in Port Fourchon, Louisiana. The spill upended the Gulf fishing industry, decimated the region’s wildlife and prompted a massive cleanup effort.

“This now looks like a line under all potential liabilities related to the spill”, said Brendan Warn, a managing director at BMO Capital Markets in London.

BP has struggled to pivot from a disaster that has drained the company of resources for six years and forced it to retrench into a period of cost savings and downsizing long before oil prices began a steep descent in 2014.

“Sometimes it takes a near death experience to radically change a company”. The company has said it has reduced costs enough for its cash flow to cover spending and dividends at an oil price of $50 to $55 a barrel next year. “An estimate of the cost of the remaining claims, expected to be paid by the end of 2016, is also included in this charge”, it said. That resolved civil claims under the Clean Water Act and Oil Pollution Act, as well as economic damage claims from regional authorities.

The next to come was an array of lawsuits and federal penalties costing the company billions to be paid to thousands of claimants.

Right now, with funds available from the financial settlement from BP and other entities, we have a once-in-a-lifetime opportunity to install a comprehensive system that will allow us to achieve a shared vision of a safer and environmentally sustainable Gulf of Mexico.