BP Allocates Extra $1.4B for Deepwater Horizon Compensation
BP said Tuesday that it was allocating an additional $1.4 billion to its Deepwater Horizon oil spill compensation fund as the amount of potential payouts increase amid what the company alleges are a wave of fraudulent claims connected to the disaster.
In its results for the second quarter of 2013, BP revealed that there is just $300 million left of a $20 billion trust fund that it set up to settle its Deepwater Horizon legal bills. Its estimate for the amount needed to compensate businesses and individuals has increased to $9.6 billion from $8.2 billion, which has taken the cumulative charge for items to be covered under the trust fund to $19.7 billion.
BP set up a Gulf Claims Fraud Hotline in mid-July in a move to tackle fraudulent claims against it.
BP also confirmed that it would continue to challenge a U.S. judges' interpretation of the settlement agreement that it reached with the Plaintiff's Steering Committee in April 2012. In April this year a Federal judge ruled against BP, rejecting the company's arguments that the fund administrator had misinterpreted how claims should be assessed and payments calculated. BP has already appealed to the U.S. Court of Appeals for the Fifth Circuit and awaits the Court's ruling in New Orleans.
Elsewhere in its results BP reported that its Upstream segment reported pre-tax underlying replacement cost profit of $4.3 billion for 2Q 2013, compared with $4.4 billion during the same period in 2012. Increasing production from new high-margin projects largely offset the impact of recent divestments made by the company.
Underlying production of oil and gas (excluding Russia and adjusted for the impact of divestments and the effect of production sharing agreements) grew by 4.4 percent compared with 2Q 2012 as production from major projects in Angola and Norway ramped up. Reported production (excluding Russia) was 2.24 million barrels of oil equivalent – 1.5 percent lower than 2Q 2012.
BP reported that its share of Rosneft earnings during the second quarter was $218 million, with its share of the Russian company's production being 945,000 boepd.
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