Tuesday, July 7, 2015

What's Next For BP Following The $18.7 Billion Settlement?

This article was first published by Seeking Alpha on Jul. 3, 2015.

By Sarfaraz A. Khan

Summary: BP has finally reached agreements to settle claims related to the 2010 Gulf of Mexico oil disaster. The settlement removes the dark clouds of uncertainty that have been hanging over this stock and will allow the company to re-focus on its core exploration and production work. The settlement will also fuel takeover speculation, with Exxon Mobil as the most likely buyer, albeit an acquisition is not going to be easy.

On Thursday, Bloomberg revealed that BP (NYSE:BP), one of Europe's leading vertically integrated energy companies and the prime suspect in the 2010 Gulf of Mexico oil disaster, has reached a settlement with the U.S. and five Gulf Coast states following a lengthy legal battle. The revelation was later confirmed by BP in a press release in which the company said that it has reached agreements to settle all federal and state claims arising from the incident which led to the death of 11 people and the worst oil spill in U.S. history.

The company has agreed to pay the U.S. $5.5 billion in civil penalty under the Clean Water Act (CWA) over a period of 15 years, $7.1 billion to the U.S. and Alabama, Florida, Louisiana, Mississippi and Texas for natural resource damage also payable over 15 years, $4.9 billion to Gulf Coast states to settle economic and other claims payable over 18 years and up to $1 billion to resolve claims related to more than 400 local government bodies. Overall, BP will pay $18.7 billion to settle …. Read full article at Seeking Alpha.