Shares in BP (LON:BP) have posted a drop in London this morning, as the company flagged a new, $1.7-billion charge in relation to the Deepwater Horizon disaster. The charge comes as the blue-chip company winds down a settlement over the 2010 Gulf of Mexico oil spill.
As of 08:40 GMT, BP’s share price had given up 1.37 percent to 525.40p. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.04 percent lower at 7,766.03 points.
New Deepwater Horizon charge
BP announced in a statement this morning that it was expecting to take a post-tax non-operating charge of around $1.7 billion in its fourth quarter 2017 results, with the Deepwater Horizon class action settlement winding down. The company explained that the charge was due primarily to significantly higher claims determinations issued by the Court Supervised Settlement Programme in the fourth quarter and the continuing effect of an adverse court ruling over business economic loss claims.
“With the claims facility’s work very nearly done, we now have better visibility into the remaining liability,” Brian Gilvary, BP's chief financial officer, commented in the statement, adding that the charge was ‘fully manageable,’ especially now that the company was “back into balance at $50 per barrel”.
Cash payments at $3bn
The blue-chip oil major further noted that its cash payments related to the Deepwater Horizon in the current year were now anticipated to be around $3 billion, as compared to the company’s third-quarter estimate of just over $2 billion.
The news marks another hit for BP, which earlier this year flagged a $1.5-billion charge as a result of the US tax reform. The group is further expected to pay $102 million to settle a lawsuit accusing the company of overcharging California for natural gas.