BP Confirms $4.5 Billion Oil Spill Fine
LONDON -- The shares of BP (ISE: BP.L) (NYS: BP) held losses at 2% in London trade today after the oil group confirmed yesterday it had decided to settle all outstanding criminal charges in relation to the Gulf of Mexico oil spill.
The FTSE 100 member revealed that agreements with the U.S. government and the Securities and Exchange Commission will see total fines of $4.5 billion paid via instalments between now and 2017. The costs include a record $1.3 billion criminal fine, a $525 million charge for misleading investors, plus a $2.7 billion payment to environmental institutions.
BP admitted the agreement would require a further $3.9 billion to be charged against the group's profit. Since the spill occurred two years ago, BP's accounts have carried associated charges of $38 billion.
Carl-Henric Svanberg, BP's chairman, said yesterday: "We believe this resolution is in the best interest of BP and its shareholders. It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims."
BP has spent $14 billion to date in response to the spill, and in March it agreed an $8 billion settlement with local businesses and individuals affected by the incident.
The resolution with the U.S. authorities comes less than three weeks after BP was confident enough to lift its quarterly dividend by 12.5%. To put the $4.5 billion total fine into perspective, BP's dividend is set to cost the firm $7 billion during the next 12 months. All the debate about the eventual cost of the Gulf of Mexico spill has meant that BP's shares currently offer a possible dividend income of 5.3%.
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