City of Tallahassee Accepts Payout in BP Settlement

British energy giant BP has agreed to settle USA federal and state claims amounting to Dollars 18.7 billion over the 2010 Gulf of Mexico oil spill.

“With this agreement we provide a path to closure for BP and the Gulf”, he added. Below, we outline the key factors driving our net present liability estimate of the recently-announced settlement agreement. Louisiana, Mississippi, Alabama, Florida, and Texas will also receive payouts for damage from the disaster, with all payments to be spaced out over as long as 18 years.

The settlement increases the pre-tax cost to BP of the explosion on board the Deepwater Horizon rig by an estimated $US13.1 billion to $US70.5 billion, the company said. And economic claims made by the five Gulf states will require $4.9 billion to be paid over 18 years.

The Thursday announcement on behalf of the US Department of Justice was the result the blowout of BP’s Macondo well.

BP’s New York-traded shares rose as much as 5% to $41.20 following news of the long-awaited settlement. The company stated that interest will be compounded annually and be payable in years 15 and 16 for CWA and NRD payments, respectively. Why should BP get to hold onto this money (and earn interest on it) rather than have it placed now in the hands of governmental representatives where it can be used to help restore the Gulf sooner?

“BP is now in the best shape since [the disaster] in terms of looking into the future”, Gheit said.

The parties still need to finalize both a Settlement Agreement (for economic loss claims) and a Consent Decree (for Natural Resource Damage and Clean Water Act claims), with the Consent Decree also subject to court approval.

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