U.K. supermajor BP plcBP is pushing for refund in some cases it considers excessive paid in connection to economic damage claims to businesses and individuals under a settlement arising from the 2010 Gulf of Mexico oil spill. The company argued its position in a federal appeals court that certain payouts prior to Oct 2013 were excessive.
The fallout is a drawback from the method of first settlement approved in 2012. The company argued that the claims administrator has not been correctly matching business' revenues and expenses, resulting in overpayments. Another court order ensued for a new calculation method but the court refused to reverse restitution of payments already made.
To correct the situation the company now wants the reversal of some cases wherein pay outs were made prior to Oct 2013. Per company estimation, the reversal involves more than 790 businesses amounting to hundreds of millions of dollars.
As a reminder, on Apr 20, 2010, offshore driller Transocean Ltd's RIG ultra-deepwater horizon drilling platform, contracted to BP, sank following an explosion while operating in the U.S. GoM off the coast of Louisiana. The incident killed 11 workers and spewed more than 200 million gallons of crude in what was touted as the country's worst oil spill ever. Subsequently, a moratorium was imposed on offshore drilling at water depths of more than 500 feet in the region, which was lifted on Oct 12, 2010.
The breach of Clean Water Act along with other laws led the U.S. government to take legal action against the main defendants in the trial - BP, Transocean and Halliburton Company HAL . Several other companies have also been taken to court.
As per the federal government, BP's Macondo well leaked nearly 5 million barrels of oil for over 87 days till it was capped. BP argues that the amount was about 2.45 million barrels. It is only after finding out the total quantity of oil that was spilled, that the full extent of BP's financial liability will be determined. BP had continuously maintained that a strong ruling over America's biggest offshore oil accident could be evaded.
London-based BP plc is one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products. It operates in three segments: Exploration and Production, Refining and Marketing, and Other Businesses and Corporate.
BP - U.K.'s third largest oil company by market value after Royal Dutch Shell plc RDS.A - holds a Zacks Rank #3 (Hold).
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