Macondo costs thump BP
Energi ; BP today posted a 63% fall in third-quarter net profit as it took another $7.66 billion of charges related to the Gulf of Mexico oil spill, which brings the likely cost of the disaster to $39.9 billion.
The charge includes the cost of the spill response, containment, relief well drilling, grants to states, claims paid and federal costs, BP said. BP also took a pre-tax charge of $32.2 billion in the second quarter related to the spill.
The UK-based energy giant said third-quarter replacement cost profit, which strips out unrealised gains or losses related to changes in the value of fuel inventories, fell 63% to $1.8 billion.
Stripping out one-offs, including the oil spill costs, the underlying results rose 18%, compared to the same period in 2009, to $5.53 billion.
The final cost of the oil spill could be far larger, or smaller, than the $40 billion charge BP has taken.
Anadarko Petroleum and Japan’s Mitsui own 35% of the blown out well and they are contractually obliged to share the costs. However, they are claiming that this obligation is void because BP was grossly negligent.
Accounting rules require BP to ignore any recoverable payments that are not certain so it is possible that the partners do, in the end, pay up to 35% of the total cost.
However, if gross negligence is proven, then BP will face the entire $40 billion bill alone, and will face additional federal fines of around $17 billion.
Total revenue for the quarter was up 10% to $74.65 billion from $67.86 billion in the same period in 2009. Diluted earnings per share were 9.4 cents compared with 28.2 cents the previous year.