BP PLC BP. BP RE: US GOVT SETTLEMENT

  BP PLC (BP.) - BP RE: US GOVT SETTLEMENT

RNS Number : 2651R
BP PLC
15 November 2012




press release



                                      

15 November 2012

                                      

    BP ANNOUNCES RESOLUTION OF ALL CRIMINAL AND SECURITIES CLAIMS BY U.S.
                          GOVERNMENT AGAINST COMPANY

                    RELATING TO DEEPWATER HORIZON ACCIDENT

                                      

· Resolution of all criminal claims with Department of Justice
includes $4 billion
paid in installments over a period of five years



· Resolution of all securities claims with Securities and Exchange
Commission includes $525 million paid in installments over a period of three
years



· Existing $38.1 billion charge against income to increase by
approximately $3.85 billion



· BP is prepared to vigorously defend itself against remaining civil
claims

                                      



London - BP  today announced  that it has  reached agreement  with the  United 
States government, subject to court approval, to resolve all federal  criminal 
charges and all claims by the Securities and Exchange Commission (SEC) against
the company  stemming from  the  Deepwater Horizon  accident, oil  spill,  and 
response.



"All of us at BP deeply regret the tragic loss of life caused by the Deepwater
Horizon accident as well as the impact of the spill on the Gulf coast region,"
said Bob Dudley, BP's Group Chief  Executive. "From the outset, we stepped  up 
by responding to the spill,  paying legitimate claims and funding  restoration 
efforts in the Gulf. We apologize for our role in the accident, and as today's
resolution with  the  U.S.  government  further  reflects,  we  have  accepted 
responsibility for our actions."



In eliminating the possibility of any further federal criminal charges against
the company  based on  the accident,  BP has  taken another  significant  step 
forward in  removing  legal  uncertainty  and can  now  focus  more  fully  on 
defending itself against all remaining civil claims.



"We  believe  this  resolution  is  in  the  best  interest  of  BP  and   its 
shareholders," said  Carl-Henric  Svanberg,  BP's Chairman.  "It  removes  two 
significant legal risks and allows us to vigorously defend the company against
the remaining civil claims."



TERMS OF RESOLUTION



As part of the resolution, BP has  agreed to plead guilty to 11 felony  counts 
of Misconduct or Neglect of Ships Officers  relating to the loss of 11  lives; 
one misdemeanor count under the Clean  Water Act; one misdemeanor count  under 
the Migratory  Bird  Treaty  Act;  and one  felony  count  of  obstruction  of 
Congress. This resolution is subject to U.S. federal court approval.

Thirteen of the  14 criminal charges  pertain to the  accident itself and  are 
based on  the  negligent  misinterpretation  of  the  negative  pressure  test 
conducted  on   board   the   Deepwater   Horizon.   BP   acknowledged   this 
misinterpretation more  than  two years  ago  when it  released  its  internal 
investigation report. Today's  agreement is consistent  with BP's position  in 
the ongoing civil litigation that this was an accident resulting from multiple
causes, involving multiple parties, as found by other official investigations.
The remaining  criminal count  pertains to  two BP  communications made  to  a 
member of Congress  during the spill  response about flow  rate estimates.  As 
part of its resolution  of criminal claims with  the U.S. government, BP  will 
pay $4 billion, including  $1.256 billion in  criminal fines, in  installments 
over a period  of five  years. BP has  also agreed  to a term  of five  years' 
probation.

Under the resolution with the Department  of Justice (DOJ), a total of  $2.394 
billion will be paid to the National Fish & Wildlife Foundation (NFWF) over  a 
period of five years. In addition, $350  million will be paid to the  National 
Academy of Sciences (NAS) over a period of five years.



Pursuant to  the terms  of the  plea agreement,  BP has  also agreed  to  take 
additional actions, enforceable by the court, to further enhance the safety of
drilling operations in the Gulf of  Mexico. These requirements relate to  BP's 
risk management  processes, such  as  third-party auditing  and  verification, 
training, and well control equipment and processes such as blowout  preventers 
and cementing. In addition, BP has agreed to several initiatives with academia
and regulators  to  develop new  technologies  related to  deepwater  drilling 
safety.



The resolution also provides  for the appointment of  two monitors, both  with 
terms of  four years.  A  process safety  monitor  will review,  evaluate  and 
provide recommendations for the  improvement of BP's  process safety and  risk 
management procedures concerning deepwater drilling in the Gulf of Mexico.  An 
ethics monitor will review and provide recommendations for the improvement  of 
BP's Code of Conduct and its implementation and enforcement.



Under U.S. law, companies convicted of  certain criminal acts can be  debarred 
from contracting with the federal government.  BP has not been advised of  the 
intention of any federal agency to suspend or debar the company in  connection 
with this plea  agreement. BP  will continue  to work  cooperatively with  the 
debarment authority.



In its resolution  with the SEC,  BP has resolved  the Commission's  Deepwater 
Horizon-related claims against the company  under Sections 10(b) and 13(a)  of 
the Securities Exchange Act of 1934 and the associated rules. BP has agreed to
a civil penalty of $525 million,  payable in three installments over a  period 
of three years, and has consented to the entry of an injunction prohibiting it
from violating certain U.S. securities laws and regulations.The SEC's  claims 
are premised on oil flow rate estimates contained in three reports provided by
BP to the SEC during a one-week period  (on April 29 and 30 and May 4,  2010), 
within the first  14 days after  the accident. This  resolution is subject  to 
U.S. federal court approval.



"Since the spill, we have worked  hard to rebuild confidence in the  company," 
said Mr. Dudley.  "We take seriously  not only our  commitment to safety  and 
operational  excellence  but  also   our  communications  with   stakeholders, 
including the public, the government and our investors."









FINANCIAL IMPLICATIONS OF RESOLUTION



The aggregate amount  of the  resolution is approximately  $4.5 billion,  with 
payments scheduled over  a period of  six years.  As of the  end of  September 
2012, BP's financial statements recorded a charge taken against pre-tax income
in relation  to the  accident and  oil  spill of  $38.1 billion.  This  charge 
included $525 million provided for  the SEC settlement. Today's resolution  is 
expected to result in an increase of approximately $3.85 billion to the  $38.1 
billion charge taken against income as of the end of September. BP's financial
statements as of the end of December 2012 will reflect this additional charge,
as well as  any other  adjustments arising during  the fourth  quarter. It  is 
anticipated that the cash  outflows can be met  within BP's current  financial 
framework. A summary payment schedule is attached to this release.



LOOKING FORWARD



BP will  continue to  vigorously  defend itself  against all  remaining  civil 
claims and to  contest allegations  of gross  negligence in  those cases.  The 
remaining claims include: federal civil claims, including those arising  under 
the Clean  Water  Act; federal  and  state Natural  Resource  Damages  claims; 
private civil  claims  pending  in MDL  2179  that  were not  covered  by  the 
settlement with the Plaintiffs'  Steering Committee (PSC); private  securities 
claims pending  in MDL  2185; state  economic loss  claims; and  miscellaneous 
private civil claims pending  in other federal and  state courts. BP  believes 
that today's agreement is consistent with  its legal position that it was  not 
grossly negligent. All the pleas related  to the accident itself are based  on 
no more than negligent conduct.



"From the  outset,  we  made a  commitment  to  clean up  the  spill  and  pay 
legitimate claims -  and we've  been fulfilling that  commitment ever  since," 
said Mr. Dudley. "As we move forward, we are preparing to defend ourselves  in 
court on  the remaining  claims. We  are  open to  settlements, but  only  on 
reasonable terms."



A SAFER, STRONGER BP



BP has taken significant steps to  further enhance safety and risk  management 
throughout its  global  operations.  It  launched  an  internal  investigation 
immediately after the accident,  publicly released the  results, and has  been 
implementing all  26 of  the investigation's  recommendations. BP  has  also, 
among other  things, made  key leadership  changes, reorganized  its  upstream 
business, created a centralized Safety and Operational Risk organization,  and 
adopted new deepwater  drilling standards in  the Gulf of  Mexico that  exceed 
current regulatory  requirements. BP  has  shared what  it has  learned  with 
industry and regulators around the world.



"We are committed to building a safer, stronger BP," said Mr. Svanberg.  "This 
work did not begin with the Deepwater  Horizon accident and will not end  with 
today's resolution."



Over the past five years, BP has invested more than $52 billion in the  United 
States - more than any other oil and gas company, and more than it invests  in 
any other country where it operates. The company employs 23,000 Americans  and 
supports nearly a quarter of a million American jobs.



On top of this business investment, BP has to date spent more than $14 billion
in operational response and clean-up costs.  BP continues to monitor the  Gulf 
and its shoreline, and  the company has  supported regional tourism,  promoted 
Gulf seafood, and committed $1 billion to early restoration projects. BP  also 
quickly set up a process  to pay all legitimate  claims and established a  $20 
billion  Trust  to  assure  Americans  that  the  resources  to  pay   claims, 
settlements, and other costs would be there. To date, BP has paid more than $9
billion to individuals,  businesses and  government entities  and has  already 
agreed to a settlement with the Plaintiffs' Steering Committee, resolving  the 
substantial majority of outstanding private economic loss, property damage and
medical claims, which BP estimates will cost approximately $7.8 billion.



Notes to Editors:



· As is typical procedure  in criminal resolutions, the government  has 
filed a document called an "information," which is a formal charging  document 
that describes the government's allegations and the offenses with which BP  is 
being charged. The plea agreement between BP and the DOJ includes an  exhibit 
called an "allocution," which  sets forth the specific  facts to which BP  has 
admitted.



· As  is typical  procedure in  SEC settlements,  the SEC  has filed  a 
Complaint in federal court in the Eastern District of Louisiana. BP consented
to the entry of a  final judgment that provides for  the payment of the  civil 
penalty and the injunction.



· The injunction to which BP has consented as part of today's agreement
with the SEC is typical in these  types of settlements. If BP were to  violate 
the injunction, the SEC can petition the Court to hold the company in contempt
of the court order.



· All deferred  payments under the  SEC settlement will  be subject  to 
applicable U.S. statutory post-judgment interest,  which is based upon a  rate 
equal to the weekly average 1-year constant maturity U.S. Treasury yield.



· BP's ordinary shares are listed on the London Stock Exchange. In the
U.S., the company's shares trade on the New York Stock Exchange in the form of
ADS. BP is subject to the information requirements of foreign private issuers
under the U.S. Securities Exchange Act of 1934. The reports on which the SEC's
claims are based were provided to the SEC on a Form 6-K. Further  information 
related to BP's listings is available  in BP's Annual Report and Accounts  and 
Form 20-F 2011.



·  BP  has  previously   secured  contributions  toward  response   and 
compensation costs  from  the co-owners  of  the Macondo  well,  Anadarko  ($4 
billion) and  MOEX  ($1  billion),  and from  contractors  who  worked  there, 
including Cameron ($250 million) and Weatherford ($75 million).













Summary Schedule of Payments



     SEC             Criminal Fine      NFWF & NAS
                                         payments          Total new cash
$M    $525M over 3    $1256M over 5                        payments
      years           years              $2744M over 5
                                         years
2012  175                                                 175
2013  175            506               420              1101
2014  175            250               345              770
2015                  150               380              530
2016                  150               590              740
2017                  200               1009              1209
Total 525            1256               2744              4525



Note: Estimated payment  dates assume  court approvals and  a sentencing  date 
prior to December 31, 2012 (the date will be set by the court) and assume that
the National Academy of Sciences agreement is signed upon announcement of  the 
resolution.



Further information:

BP press office, London: +44 (0)20 7496 4076, bppress@bp.com

                                   - ENDS -

                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


MSCUVRNRUAAAAAA -0- Nov/15/2012 16:05 GMT
 
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