Anadarko Agrees to Pay $4 Billion to BP

BP (NYSE:BP), the British based oil company on Monday said that Anadarko Petroleum (NYSE:APC) has agreed to pay $4 billion in order to settle claims related to the oil spill in the Gulf of Mexico last year.

This settlement brings a conclusion to a long dispute between BP and Anadarko and will also pave the way for other BP contractors to come forward with an agreement. Both BP and Anadarko were operating at the gulf oil well in which 25 percent stake was owned by the latter. Anadarko accepted responsibility to compensate for those affected by one of the worst ever oil spills in the history of United States.

British Petroleum continues to fight with its contractors, Halliburton, who is responsible for cement work and also Transocean who operated the rig, to take part in the compensation payments. BP on Monday said that the Anadarko settlement should be an example for the two contractors. Adding BP spokesperson said that this settlement was not to encourage liability, concluding the investigation BP said that the accident was involving several companies resulting in multiple mistakes on their behalf.

Robert Dudley, Chief Executive Officer for BP said that this settlement shows clear progress with both parties taking initiatives to fulfill their obligations and facilitate fund for the environmental and economic restoration of the Gulf of Mexico. Mr. Dudley added that it’s time for the two contractors Halliburton and Transocean to do the same.

Anadarko the Huston based petroleum company will no longer pursue gross negligence claims with British Petroleum, according to the settlement. Anadarko will also transfer its stakes to BP that it owns in the Gulf well. BP in turn, said in a statement that it will indemnify Anadarko for some claims excluding criminal, civil, administrative fines and punitive damage claims.

James T. Hackett, the chief Executive of Anadarko, in a statement called the settlement as the perfect move for companies shareholders. Mr. Hackett said “the deal removes significant uncertainty regarding future liabilities and associated risks”

British Petroleum has planned to give around $20 billion to the trust which the company will be using to compensate for those businesses and individuals claimed to be affected by the spill. British Petroleum has paid over $7 billion in compensation claims for the Gulf spill. Anadarko will pay BP the sum in a single cash transaction, said BP.

The current settlement comes to light about 5 months after BP had a similar settlement with Moex Offshore, which owned a ten percent stake in the Gulf well. Moex paid BP about half of the $2 billion that British Petroleum wanted from the company.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.