By David Wethe and Rakteem Katakey

(Bloomberg) — BP Plc has raised the entire legal responsibility from the Deepwater Horizon oil catastrophe, which triggered the worst offshore oil spill in U.S. historical past, by $5.2 billion to $61.6 billion earlier than tax.

The London-based firm expects to take a $2.5 billion after-tax cost in its second-quarter earnings following “significant progress” in resolving excellent claims, it stated in an announcement Thursday. Any additional funds associated to the 2010 incident that killed 11 staff and spewed hundreds of thousands of barrels of crude into the Gulf of Mexico gained’t have a fabric affect on monetary efficiency, it stated.

“Over the past few months we’ve made significant progress resolving outstanding Deepwater Horizon claims,” Chief Financial Officer Brian Gilvary stated within the assertion. “Importantly, we have a clear plan for managing these costs and it provides our investors with certainty going forward.”

The Gulf of Mexico oil spill remodeled BP, prompting the resignation of former Chief Executive Officer Tony Hayward and forcing the corporate to promote property and downsize its operations to cowl the billions of {dollars} of fines, penalties and compensation. The firm pumped 3.14 million barrels equal a day of oil and fuel final yr, in contrast with virtually 4 million in 2009. It’s present market capitalization of $114 billion is greater than a 3rd decrease than previous to the catastrophe.

Record Settlement

The estimate means BP may have booked a complete of $44 billion in after-tax expenses associated to the catastrophe. The firm will proceed to make use of proceeds of asset gross sales to satisfy these prices, Gilvary stated. It has stated it plans to lift $3 billion to $5 billion from gross sales this yr and $2 billion to $3 billion a yr from 2017. BP is scheduled to launch second-quarter monetary outcomes on July 26.

The new $5.2 billion cost is said to potential funds to companies and people who’ve claimed they had been affected by the 2010 spill within the Gulf of Mexico. BP estimates some claims to people can be paid by the top of this yr whereas it expects to resolve different claims of enterprise and financial loss by 2019, in accordance with the assertion.

“This now looks like a line under all potential liabilities related to the spill,” stated Brendan Warn, a managing director at BMO Capital Markets in London. “This doesn’t change BP’s organic cash flow estimates and now helps them move on and continue on their path of delivering projects and keeping the company on track.”

Spending Cuts

In addition to promoting property to pay for the spill, the hunch in oil costs over the previous two years has pressured BP Chief Executive Officer Bob Dudley to chop spending so as to shield the steadiness sheet and keep dividend payouts to shareholders. The firm has stated it has diminished prices sufficient for its money stream to cowl spending and dividends at an oil value of $50 to $55 a barrel subsequent yr. Brent, the worldwide benchmark, has averaged $41.70 a barrel this yr.

At the top of final yr, BP had put aside $14.3 billion for spill response expenses, $22.6 billion for litigation prices and claims and $8.6 billion for setting harm prices.

The $20.8 billion settlement it agreed final yr with the U.S. authorities and 5 Gulf states over the spill was the biggest within the Department of Justice’s historical past. That resolved civil claims beneath the Clean Water Act and Oil Pollution Act, in addition to financial harm claims from regional authorities. The firm agreed to pay the pure useful resource claims over 18 years and the financial harm claims over 15 years.

BP reached separate agreements to resolve legal expenses, settle claims it hid the dimensions of the spill, and canopy personal property and financial damages.

In December, federal prosecutors dropped manslaughter expenses towards BP’s two prime workers on the Deepwater Horizon, which was operated by Transocean Inc. The males had been accused of ignoring a number of alerts that the nicely was dangerously unstable earlier than the explosion.

© 2016 Bloomberg L.P