Judge approves BP settlement

A federal judge approved a $4 billion settlement of criminal charges Tuesday between BP PLC and the U.S. Justice Department over the deadly Deepwater Horizon accident in the Gulf of Mexico.

BP admitted, as part of the settlement approved by U.S. District Judge Sarah Vance in New Orleans, that it bore responsibility for the 11 lives lost in the April 2010 explosion, which triggered the largest offshore oil spill in U.S. history.

The company, which was in charge of the rig that exploded, pleaded guilty to 11 felony counts of manslaughter, one felony count for lying about the size of the spill and several misdemeanor environmental crimes.

Some survivors and family members of workers who died attended the hearing to voice objections to the settlement.

"BP understands and acknowledges its role in that tragedy, and we apologize—BP apologizes—to all those injured, and especially to the families of the lost loved ones," BP Vice President Luke Keller told the judge.

BP's legal troubles aren't fully resolved. A government civil suit alleging violations of the Clean Water Act from the spill increasingly appears headed for trial next month. The law allows for penalties ranging from $1,000 to $4,300 per barrel of oil spilled, depending on whether a company is found grossly negligent, and could raise BP's exposure into the billions.

The government has said it believes about 4.9 million barrels of oil leaked from the subsea well. BP said in court filings it believes the true size of the spill could be 20% to 50% less, and has asked a judge to acknowledge it captured more than 800,000 barrels of oil from the well, which would further decrease the size of potential fines.

Tom Claps, an analyst with Susquehanna Financial Group, estimates BP could face $6 billion to $10 billion in civil payments to the U.S. government, including Clean Water Act fines. Gulf Coast states could receive an additional $1.5 billion to $2.5 billion from BP for lost tax revenue and other costs associated with the spill, Mr. Claps said.

Transocean Ltd., RIGN.VX -1.13%the rig's owner, and Halliburton Co., HAL +1.49%which provided well-cementing services on the well, also are parties to the civil suit. They are preparing to go to trial Feb. 25, said people familiar with the matter, barring a last-minute settlement.

(Published by WSJ - January 29, 2013)