BP 2014 Annual Report Download - page 42

Financial update
1
6
2
3
4
5
■ 1. Spill response 14.3
■ 2. Environmental 3.2
■ 3. Litigation and claimsb
■ 4. Clean Water Act penalties 3.5
■ 5. Other fines 4.5
■ 6. Functional costs 1.3
Total 43.5
a The cumulative income statement charge does not include
amounts that BP considers are not possible to measure
reliably at this time.
b
The litigation and claims cost is net of recoveries of $5.7 billion.
Analysis of cumulative $43.5 billiona charge to the
income statement ($ billion)
16.7
The group income statement for 2014 includes a pre-tax charge of
$819 million in relation to the Gulf of Mexico oil spill. The charge for
the year reflects additional litigation and claims costs and the ongoing
costs of the Gulf Coast Restoration Organization. As at 31 December 2014,
the total cumulative charges recognized to date amount to $43.5 billion.
The total amounts that will ultimately be paid by BP in relation to all the
obligations relating to the incident are subject to significant uncertainty and
the ultimate exposure and cost to BP and the timing of such costs will be
dependent on many factors, including in relation to any new information or
future developments. These could have a material impact on our
consolidated financial position, results and cash flows.
BP has provided for spill response costs, environmental expenditure,
litigation and claims and Clean Water Act penalties that can be measured
reliably. The cumulative income statement charge does not include
amounts for obligations that BP considers are not possible to measure
reliably at this time, such as:
 Natural resource damages, except for reasonable costs for damage
assessment, the $1-billion allocation for early restoration projects and
associated legal costs.
 Any obligation that may arise from securities-related litigation.
 The cost of business economic loss claims under the PSC settlement
not yet received, or received but not yet processed, or processed but
not yet paid (except where an eligibility notice had been issued before
the end of the month following the balance sheet date and is not subject
to appeal by BP within the claims facility).
 Claims asserted in civil litigation, including any further litigation through
excluded parties from the PSC settlement.
 Any further liability for the Clean Water Act penalty arising in the event
the gross negligence finding is upheld.
 Any further obligation that may arise from state and local claims.
The additional amounts payable for these and other items could be
considerable. More details regarding the impacts and uncertainties relating
to the Gulf of Mexico oil spill can be found in Risk factors on page 48, Legal
proceedings on page 228 and Financial statements – Note 2.
Deepwater Horizon Oil Spill Trust update
BP, in agreement with the US government, set up the $20-billion
Deepwater Horizon Oil Spill Trust (the Trust) to provide confidence that
funds would be available to satisfy legitimate individual and business
claims, state and local government claims resolved by BP, final judgments
and settlements, state and local response costs, and natural resource
damages and related costs. The cumulative charges to the Trust had
reached $20 billion in 2014. Subsequent additional costs over and above
those provided within the $20 billion, are being charged to the income
statement as they arise.
Payments made out of the Trust during 2014 totalled $1.7 billion for
individual and business claims, medical settlement programme payments,
natural resource damage assessment and early restoration, state and local
government claims, costs of the court supervised settlement programme
and other resolved items. As at 31 December 2014, the aggregate cash
balances in the Trust and the associated qualified settlement funds
amounted to $5.1 billion, including $1.1 billion remaining in the seafood
compensation fund, from which a further $0.5 billion partial distribution
started in early 2015, and $0.4 billion held for natural resource damage
early restoration projects.
BP Annual Report and Form 20-F 201438