BP 'Preparing Vigorously' for Deepwater Horizon Trial
BP is preparing a robust defense for the forthcoming limitation and liability trial relating to the Deepwater Horizon oil spill that is due to begin in New Orleans on Feb. 27 2012, according to Chief Executive Bob Dudley.
"As I have said before, we are prepared to settle if we can do so on fair and reasonable terms, but equally, if this is not possible, we are preparing vigorously for trial," said Dudley as the firm announced its fourth quarter results Tuesday.
Last month, the firm dismissed what it described as "speculation" from an analyst at investment bank Morgan Stanley that it would settle the Macondo case for $25 billion, although it would not comment on whether it was in discussions with the US Department of Justice.
BP also said Tuesday that it made contributions amounting to $5.3 billion to the Deepwater Horizon Oil Spill Trust fund during the fourth quarter of 2011, bringing total Trust contributions for the year to $10.1 billion.
The fourth quarter contributions included a $4 billion cash settlement that BP received in October 2011 from Anadarko Petroleum Company to settle claims connected to its role in the spill. Meanwhile, a $250 million payment from Cameron following settlement with BP during 4Q 2011 was paid into the fund last month.
BP said that payments from the Trust during 4Q 2011 were $700 million, bringing Trust disbursements for the year to $3.7 billion. Disbursements from 4Q 2011 consisted of $526 million paid through the Gulf Coast Claims Facility for individual and business claims, $145 million for natural resource damages assessment costs and $29 million for state and local government claims and other resolved items, added the firm.
As of Dec. 31 2011 the cumulative amount paid from the Trust since its inception was $6.7 billion, while BP's cumulative contributions to the Trust amounted to $15.1 billion.
Separately, BP reported that "operational momentum" has returned to the company, with operating cash flow generated during 2011 reaching some $22 billion – 60 percent greater than in 2010. Dudley also confirmed the company's expectation that net cash flow in 2014 (in a $100 barrels oil price environment) would be around 50 percent greater than in 2011.
BP said that half of the additional cash is expected to be reinvested in the company's operations.
The firm's strategy for 2012 will include: the drilling of 12 exploration wells (double those drilled in 2011), the starting up of six major upstream projects in high-margin areas; the operation of eight rigs in the US Gulf of Mexico by the end of this year; and increasing capital investment to around $22 billion as the firm invests to grow its upstream operations.
"We now have a robust pipeline of opportunities with exploration prospects that will generate new resources and projects well into the next decade. We will see a continued ramp up of exploration over the next two to three years," added Dudley.
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