BP Draws Line under Deepwater Horizon Liabilities

BP Group Chief Executive Bob Dudley said Tuesday that the company has "finally drawn a line under" its material liabilities for the April 20, 2010 Deepwater Horizon disaster and associated oil spill. In its second quarter results statement, BP said that the total cumulative pre-tax charge for liabilities connected to the Deepwater Horizon accident amounts to $61.6 billion, including the current quarter's $5.2 billion pre-tax charge.
Dudley added that the company "will always be mindful" of what it has learned from the Deepwater Horizon accident.
Also in its results statement, BP said that it is now focusing a wave of upstream major project start-ups designed to deliver growth through to 2020. These projects are part of an upstream strategy that aims to add 800,000 barrels of oil equivalent per day (boepd) to its total production by 2020. Of these, projects with 500,000 boepd of new production capacity are expected to be in place by the end of 2017, the firm said.
BP recently sanctioned two new major upstream projects: the Tangguh LNG expansion project in Indonesia and the Atoll Phase One gas project offshore Egypt. The Tangguh project – which will see a third liquefied natural gas production train and new platforms, wells and other infrastructure added to existing facilities – will create 10,000 new jobs and support economic growth in Indonesia's Papua Barat Province. The Atoll Phase One project is an early production scheme where BP plans to deliver up to 300 million cubic feet per day of natural gas to the Egyptian domestic gas market when it starts production in the first half of 2018.
Meanwhile, the company's new water injection project on the Thunder Horse field in the US Gulf of Mexico was completed in May. Water in the reservoir is designed to increase pressure and enhance production so that Thunder Horse will produce an additional 65 million barrels of oil equivalent over time.
BP's 2Q 2016 results revealed the firm had made a net income of $720 million during the quarter (2Q 2015: $1.3 billion). Although this was greater than the $532 million net income the company produced in the first quarter of this year, it was 14-percent below what analysts had been expecting.
The company's production during the second quarter averaged 2.09 million boepd, which was 13.9 percent down on that for 1Q 2016. In spite of BP's plans to significantly boost production by 2020, analysts at investment bank Jefferies noted that current production is expected to decline further during the third quarter due to seasonal turnarounds and maintenance, as well as the impact of a planned outage at the Enterprise Pascagoula gas processing plant in the Gulf of Mexico.
Dudley said that the firm expects "the external environment to remain challenging". Consequently, the firm sees full-year capital spending coming in below $17 biillion, which would be down significantly on the $18.7 billion it spent last year.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ITEM Club: More Jobs Losses Expected in NE Scotland due to Oil Slump
- Shell Q&A: What Makes an Ideal Employer in Oil, Gas?
- Shell Takes First Place in Rigzone's Inaugural Ideal Employer Survey
- UK Government 'Must Recommit' to Oil, Gas Sector in Autumn Statement
- UK Government Gives Go-Ahead for Fracking in NW England
- Oil Prices Move Sharply Lower
- Summer Driving Season Off to a Slow Start
- China Allows Refiners to Export 40 Percent Less Fuel
- OPEC Secretary General Passes Away
- Norway Energy Strike to End
- New Houston Headquartered Oil Producer Established
- Three60 Energy Acquires Fraser Well Management
- Versalis To Build Recycling Unit at Porto Marghera
- TGS Brings Prediktor Under Its Ownership
- Centurion Group Creates Centurion Subsea Services
- Citi Warns Oil May Collapse
- Who Produced the Most Oil and Gas in 2021?
- Saudis Raise Oil Prices to Near Record
- USA Drops Rigs Week on Week
- Permian Highway Pipeline in Expansion Project FID
- Top Headlines: USA Energy Sec Leads Meeting with 7 Major Oil Companies
- Shell Looking for TikTok Expert
- UAE Raises Fuel Prices Again
- Earthstone in $627MM Delaware Basin Deal
- Drones Sent Towards Israeli Gas Rig
- USA Navy and Iran Corps Clash in Strait of Hormuz
- Citi Warns Oil May Collapse
- Oil Industry Responds to Biden Letter
- Top Headlines: USA Navy and Iran Corps Clash in Strait of Hormuz and More
- Oil Nosedives on Fed Inflation Actions
- Top Headlines: Oil Industry Responds to Biden Letter and More
- Fitch Solutions Reveals Latest Oil Price Forecast
- Too Early To Speculate on ExxonMobil Refinery Fire Cause
- ExxonMobil Made More Money Than God This Year
- Russian Oil Disappears as Tankers Go Dark