BP has warned its investors that profits are likely to decline for the coming months as claims related to the 2010 Deepwater Horizon continue to come in. After setting aside $20 billion to repay Gulf Coast businesses affected by the disaster, BP claims that it has only $300 million left in its oil spill compensation fund.
CEO Bob Dudley has been vocal that the compensation deal struck with US officials, despite looking like a good deal for the corporation, has been ‘badly misinterpreted’ and that the largest beneficiaries are not businesses on the Gulf Coast but law firms filing their own compensation suits against the oil company.
Company spokespeople recently announced that BP’s costs increased by $1.4 billion in the second quarter as claims related to the oil spill increased. Companies affected by the oil spill have until the end of April next year to make claims for compensation due to economic losses related to the environmental disaster.
The extra claims are to be taken out of BP’s future profits, with analysts estimating that BP will likely pay around $42.4 billion due to the oil spill. The company’s share price dropped 4.5 percent in trading on the Tuesday morning following statements that the compensation would likely exceed the $20 billion fund’s limits.
Bob Dudley claims that the oil giant has absolutely ‘no problems’ compensating any individuals or businesses that were adversely affected by the oil spill, but added that many of the claims made by businesses were not legitimate. The CEO claims that the compensation fund has been misinterpreted by class action plaintiffs’ attorneys.
Repaying Gulf Coast businesses appears to have had a serious effect on BP’s profits over the last year, with the company reporting a 24 percent decline in its operating profits during the second quarter of this year. After $3.6 billion in quarterly profits twelve months ago, BP earned just $2.712 billion in the second quarter this year.
