BP PLC (LON:BP) doesn’t expect its legal claims from the Gulf of Mexico oil spill to go beyond the $20 billion it had set aside in an escrow fund managed by the government.
A research report from Citigroup, Inc (NYSE: C) equities research analysts Mark Fletcher said that incoming BP CEO Robert Dudley expects payouts to be less than $20 billion set aside aside in the Independent Claim Fund. Fletcher said in the note that Dudley feels “given current estimates of claims the $20 billion Independent Claim Fund (ICF) that BP established probably exceeds calls.”
Earlier in the summer, BP took a one-time charge of $32.2 billion from fines and litigation related to the oil spill. Last month the company said that the clean-up costs stood at about $8 billion, including 127,000 claims that it made totaling $399 million.
“A complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces came together to allow the initiation and escalation of the accident,” the report said.
The oil spill has spewed more than 5 million barrels of crude oil into the Gulf of Mexico since April 20th, which effected fishing and tourism industries and had a negative effect on the area’s eco system. As a result, BP took a charge of $32.2 billion after the second quarter and set aside $20 billion to pay claims. Several lawsuits have been filed against BP as well.
The company is hoping to plug the damaged well permanently using a “bottom kill” technique in which the damaged well will be plugged at the base of the damaged well using drilling mud and cement.
