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BP puts upbeat spin on Deepwater Horizon charges

Oil giant says it now has a clear financial path charted after release of costs tied to 2010 oil spill.

By Daniel J. Graeber
BP puts upbeat spin on Deepwater Horizon charges
BP says releasing details of costs tied to the Deepwater Horizon accident in 2010 is good news for its financial strategy moving forward. File Photo courtesy the U.S. Coast Guard | License Photo

LONDON, July 15 (UPI) -- With the full charges associated with the 2010 oil spill in the Gulf of Mexico revealed, BP said it now has a clear plan for managing costs in the future.

For the first time, the British energy giant revealed the total cost associated with the 2010 accident at the Deepwater Horizon oil rig was around $62 billion. With that revelation, the company added that it expects to take a second quarter charge of around $2.6 billion.

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BP Chief Financial Officer Brian Gilvary said in a statement the company aims to use the proceeds from some of its divestment strategies to help meet any outstanding commitments related to the 2010 spill.

"We have a clear plan for managing these costs and it provides our investors with certainty going forward," he said.

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First out of the gates with a report in a first quarter that saw crude oil prices drop below $30 per barrel, BP said it was trimming its spending target toward the low end of its estimate between $17 billion and $19 billion for the year. The oil major said that forecast could be revised even lower if the oil economy remains weak.

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Gilvary at the time said the company was envisioning a price range for oil at between $50 and $55 per barrel as the tipping point for balance. The price for Brent crude oil was trading in the upper $46 range early Friday.

A cascading string of events led to what the industry calls a blowout, which triggered explosions on rig that eventually left 11 workers dead and sparked the worst accidental offshore oil spill in the history of the industry.

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Carl Barbier, the judge overseeing the case in the U.S. District Court of the Eastern District of Louisiana, ruled BP released 3.2 million barrels of oil into the Gulf of Mexico in 2010, about 1 million barrels less than the government estimated.

His ruling left BP facing a maximum $13.7 billion fine, down from the maximum $18 billion for violations of the Clean Water Act.

The Supreme Court last year refused to hear two separate cases filed by BP and Anadarko Petroleum challenging fines related to the 2010 oil spill in the Gulf of Mexico. BP said in its statement on final spill costs that any outstanding claims would not have a material impact on its financial performance.

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"It will deal with remaining claims in the ordinary course of business," the company said.

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