BP said that it will take an charge of about $1.7bn to settle class action suits filed against it following the Deepwater Horizon accident in the US waters in 2010.
The post-tax non-operating charge will be recorded in its fourth quarter 2017 results, stated the oil and gas major.
BP said that the Court Supervised Settlement Program (CSSP) formed as part of the Deepwater Horizon (DWH) class action settlement is coming to a closure.
The company is anticipating the cash impact to be spread over a multi-year period.
BP chief financial officer Brian Gilvary said: “With the claims facility’s work very nearly done, we now have better visibility into the remaining liability.
“The charge we are taking as a result is fully manageable within our existing financial framework, especially now that we have the company back into balance at $50 per barrel.”
BP expects cash payments related to DWH this year to be about $3bn in comparison to its third-quarter estimate of just over $2bn.
The company said that it will continue to strongly appeal determinations of claims that it reckons are not compensable under the Plaintiffs’ Steering Committee settlement agreement.
The Deepwater Horizon was an offshore drilling rig owned by Transocean and leased to BP from 2001 to September 2013.
In April 2010, the drilling rig deployed at the BP-operated Macondo Prospect in the Gulf of Mexico, off the southern coast of Louisiana, exploded due to an uncontrollable blowout. The accident, which took place near the Mississippi River Delta, left 11 crewmen dead and 17 injured, making it one of the deadliest incidents in the offshore industry.
Apart from the human tragedy, there was a massive oil spill resulting from the Deepwater Horizon accident. As per a US government estimate, the total discharge caused due to the oil spill was 4.9 million barrels.
Image: The Discoverer Enterprise and the Q4000 work around the clock burning undesirable gases from the still uncapped Deepwater Horizon well in the Gulf of Mexico. Photo: courtesy of DVIDSHUB/Wikipedia.org.