BP preparing "vigorously" for oil spill lawsuits

Tue Feb 7, 2012 6:19am EST
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By Tom Bergin

LONDON (Reuters) - BP said it was preparing "vigorously" for lawsuits related to its Gulf of Mexico oil spill, which are due to start later this month, as it unveiled a rise in fourth-quarter earnings boosted by higher oil prices and one-off gains.

Chief Executive Bob Dudley said on Tuesday BP was ready to settle the approximate 600 civil lawsuits it faces from people in states as far away as South Carolina and Kentucky, as well as litigation from the government, on "fair and reasonable terms."

However, as the clock ticks to the February 27 start of hearings in New Orleans, he added BP was also ready to fight.

Alastair Syme, oil analyst at Citigroup, said he expected the case to go to trial.

BP, Europe's second-largest oil company by market value, lifted its estimate of the total cost of the United States' worst-ever offshore oil spill by $1.8 billion to $43 billion due to higher costs for shoreline clean up, which BP said was now largely complete, and a new $500 million charge for legal fees.

Some analysts think the final figure could be much higher. By contrast, BP's statement showed the company has valued the doomed Macondo prospect at just $400 million.

However, the company added that over $5 billion of contributions from its partners in the blown-out well, Anadarko Petroleum and Japan's Mitsui, meant it would be able to end its own payments into a $20 billion compensation fund in 2012, a year earlier than expected.

Underscoring its confidence, BP also increased its quarterly dividend to 8 cents a share from 7 cents, backed by strong cashflows due to higher oil price.   Continued...

<p>Preparations to drill a relief well continue at the Macondo oil spill site in the Gulf of Mexico, in this aerial photograph taken from a coast guard helicopter on August 21, 2010. REUTERS/Ann Driver</p>