LONDON - BP PLC said Wednesday it has reached a definitive settlement agreement with lawyers representing thousands of individuals and businesses hurt by the Gulf of Mexico oil spill, solidifying the proposed accord agreed between the two parties early last month.
The deal, worth approximately $7.8 billion, is in line with the sum initially mooted March 2 and will be paid from a $20 billion trust initially set up by BP in the aftermath of the spill. BP set aside a total $37.2 billion to cover the costs of the disaster.
A New Orleans, La., judge will now have to decide whether to approve the settlement, which is split into two classes: economic loss claims and medical claims.
Those under the economic loss category include businesses, property owners and individuals along the Gulf of Mexico who sustained economic damage from the 87-day oil spill, the biggest offshore spill in U.S. history. The medical claims class include a range of individuals who may have health problems due to the spill, including the tens of thousands of spill clean-up workers. Those individuals may be eligible for medical consultation services for the next 21 years.
"BP made a commitment to help economic and environmental restoration efforts in the Gulf Coast, and this settlement provides the framework for us to continue delivering on that promise, offering those affected full and fair compensation, without waiting for the outcome of a lengthy trial process," said BP Chief Executive Bob Dudley in a statement.
However, BP still faces the prospect of a lengthy court battle if it fails to reach similar settlements with other parties, including the U.S. government and contractors on the ill-fated Deepwater Horizon rig--Halliburton Corp. (HAL) and Transocean Ltd. (RIG), as well as blowout preventer-manufacturer Cameron International Corp. (CAM).
BP has filed cross-claims with those companies, saying they are partially culpable for the accident. All those companies have denied this.
Wednesday's final and definitive settlement doesn't resolve claims that the plaintiffs may make against Transocean, Halliburton or Cameron.
It also doesn't cover claims against BP by the U.S. Department of Justice or other federal agencies for violations of the Clean Water Act, or by the states and local governments.
BP shares ended Thursday down 7 pence, or 1.4%, at 446p, implying a market capitalization of $84.8 billion. By way of comparison, the FTSE 350 oil and gas index closed down 0.5%.
Copyright (c) 2012 Dow Jones & Company, Inc.
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