BP and Weatherford strike Macondo liability deal
Weatherford pays BP $75 million in exchange for indemnity from claims.
BP and Weatherford announced yesterday that they have settled any claims they may have against each other resulting from the Deepwater Horizon disaster that killed 11 crewmen aboard the Transocean rig and led to the largest offshore oil spill in United States history, from the Macondo prospect well in the Gulf of Mexico.
The companies have agreed to have agreed to mutual releases of potential claims against each other, and BP has agreed to indemnify Weatherford for compensatory claims resulting from the accident, including claims brought relating to pollution damage stemming from the accident. Both companies state that the agreement is not an admission of liability by any party regarding the accident.
In return, Weatherford is contributing $75 million to BP's $20 billion trust set up for the payment of individual, business and government claims, as well as the cost of the Natural Resource Damages. To date, BP has paid more than $6 billion in claims.
In a BP statement, the company said Weatherford has become the second party in the last month to join BP in acknowledging findings by the Presidential Commission that the Deepwater Horizon incident was the product of "complex causes involving multiple parties".
"This settlement allows BP and Weatherford to put our legal issues behind us and move forward together in strengthening processes and procedures, safety, and best practices in offshore drilling," said BP America Chairman and President Lamar McKay in a press statement.
“We are extremely pleased to have reached an amicable resolution with BP, a valued customer, that gives our shareholders finality with respect to the vast majority of any potential exposure Weatherford might have from last year’s incident in the Gulf,” said Bernard J. Duroc-Danner, President and CEO of Weatherford. “Weatherford is particularly pleased that, as part of our continued commitment to the environment and worker safety, the settlement includes opportunities for us to partner with BP to improve offshore drilling operations.”
Weatherford is the first of BP's contractors to formally agree with BP that the entire industry can and should learn from the Deepwater Horizon incident.
Accordingly, Weatherford has committed to working with BP to take actions to improve processes and procedures, managerial systems, and safety and best practices in offshore drilling operations. BP and Weatherford will encourage other companies in the drilling industry to join them in this improvement and reform effort.
Weatherford and BP have concluded that entering into this settlement is in their mutual best interests. Under the settlement and indemnity agreement, Weatherford, which manufactured the float collar used in the well, will pay BP $75 million, which BP will add to the $20 billion trust it established to meet individual, business and government claims, as well as the cost of the Natural Resource Damages.
No such settlements have yet been reached between BP and the other parties implicated by the United States Presidential Commission report into the disaster. A 2010 analysis by the Financial Times estimates the litigation following the disaster will be unprecedented in scope, scale and complexity, and may take around 20 years to complete.