CHIEF executive Bob Dudley has vowed to dig in for a long-haul legal battle as BP fights “absurd” compensation claims worth more than $1 billion (£650 million) in the wake of the Deepwater Horizon oil slick.
Dudley said he would stand up for shareholders against a flood of litigation after the company admitted that a vast trust fund it had set up to cover the bill was about to run out, leaving profits under pressure.
He would not rule out taking the case to the US Supreme Court and said BP would go after companies found to have been wrongly given pay-outs.
Dudley said: “We are fighting this aggressively because we have a duty to our shareholders, but also because it’s simply the right and principled thing to do.
“No company would agree to a settlement that pays businesses that suffered no losses.
“As we continue to fight these absurd outcomes, we want everyone to know we are digging in and are well-prepared for the long haul on legal matters.”
The oil giant said it had put aside an extra $1.4bn in compensation for individuals and businesses affected by the 2010 catastrophe, as it announced second quarter results for this year.
It admitted that the remaining $300m in the trust would be fully used up in the coming months, leaving additional amounts to be “charged to the income statement”. The amount set aside for compensation payments has now risen from $7.8bn to $9.6bn.
BP’s total estimated bill following the disaster stands at $42.4bn – a sum that takes into account clean-up costs and fines.
The blow-out of the Deepwater Horizon well off the Louisiana coast in 2010 claimed 11 lives and damaged fishing and tourism as well as marine and wildlife habitats, forcing the company to sign a multi-billion compensation deal last year.
But it is now aggressively challenging the way claims are being handled by a court-appointed administrator and judge.
BP’s complaint centres on the way businesses are allowed to compare profits before and after the spill in favourable ways. It has cited one example of a $9.7m pay-out to a construction company based 200 miles off the coast of Alabama, even though 2010 was its best year on record.
Brian Gilvary, BP’s chief financial officer, said there were “in excess of $1bn of claims we believe that are not legitimate”.
BP’s second-quarter profits fell by 25 per cent year-on-year to £1.8bn, missing City forecasts as lower oil prices, a higher tax bill and maintenance work all took their toll. The dividend was held at 9 cents (6p).
Keith Bowman, an analyst at Hargreaves Lansdown, said: “BP is a company trying to look forward but remaining firmly anchored to the past. For now, and given such uncertainties, analyst opinion continues to point to a hold, albeit a strong one.”