BP Rebuffed Again on Spill Claims

Energy

Published: April 5, 2013 2:42 pm

Last Updated: April 27, 2020 6:05 pm

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The April 2010 well blowout in the Gulf of Mexico that took 11 lives and dumped 5 million barrels of crude in the Gulf of Mexico will cost BP plc (NYSE: BP) an estimated $42 billion in fines and other payments before the saga comes to an end. That total could jump, however, if the company is not able to succeed in persuading the court that many compensation claims are either fictitious or at least exaggerated.

For the third time in a year, a New Orleans court has rejected BP’s claims that the independent claims administrator is misinterpreting the company’s settlement to meet compensation claims in a way that will cost BP billions more dollars. Under the terms of the settlement, BP agreed to pay $2.67 billion in claims for business losses. The company has paid out about half that amount at an average of $233,000 per claimant. Fewer than 6,000 payments have been made on more than 40,000 claims receive so far.

BP has already said that these claims could boost the cost of its settlement beyond its estimate of $7.8 billion, and unless the courts sharpens the definition of what may be claimed, BP says the estimate could be billions short of eventual payments.

The company has already appealed the court’s earlier decisions to the federal appeals court and will likely add this last denial to the appeal next week.

BP’s shares are up about 0.3% in mid-afternoon trading today at $41.40 in a 52-week range of $36.25 to $45.45.

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