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Still months away from the deadline to settle claims for loss of earnings due to the infamous Gulf of Mexico oil spill, the embattled BP plc (LSE:BP.) said today that the US$20-billion Deepwater Horizon Oil Spill Trust fund has only US$300 million left and the oil giant expects that the remaining balance will be utilised by the third quarter of this year.
In a statement earlier today, London-based BP said that as of 30 June 2013, total claims charged against the trust fund reached US$19.7 billion, including US$1.4 billion business economic loss charged for the second quarter of this year.
BP said that the total value of all business economic loss claims is still unascertainable at the moment and the firm admitted that it may have to inject additional cash to the fund to meet future claims, though the total eligible claims have already reached US$9.6 billion.
The trust fund was set up in 2010 to satisfy claims and costs of individuals, businesses, and government agencies in the explosion at BP’s Macondo well in the Gulf of Mexico that killed 11 people and the multi million barrels of oil spilled.
In total, BP has spent over US$42 billion since the incident happened three years back and a host of suits are still being fought in the courts in the US. The ruling as to whether or not BP was negligent or grossly negligent, the trial of which commenced in February of this year, still has to be decided, with the decision to affect how much is BP liable in violating the Clean Water Act along with the second trial for the total volume of oil spilled in the Gulf of Mexico is to commence in September.
In all of this, BP continues to fight dubious claims as well as challenge the interpretation of the claims administrator of the settlement agreement and any excess in the value of claims will be charged against the firm’s income.
BP’s second quarter profit fell from US$4.2 billion during January to March of this year to US$2.7 billion between April and June, still below the US$3.6 billion for the same period a year ago.
The company said lower oil prices, unusually high effective tax rates, and lower income from its Russian business driven by a depreciated Rouble and a stronger US dollar affected profitability.
Nonetheless, Chief Executive, Bob Dudley stated it was still a strong underlying pre-tax performance from BP’s businesses.
“We are seeing growth in production from new high-margin projects and are making good progress in exploration and project delivery. Completion of our operational milestones confirms our confidence in delivering our commitment to materially increase operating cash flow in 2014,” Dudley said.
Shares of BP dropped 4.2% to 448 pence on the London Stock Exchange at 1:45 PM GMT.
