BP to Pay $175 Million to settle claims to US investors that “its managers lied about” size of 2010 Gulf of Mexico oil spill; Current Encana CEO Doug Suttles was one of those managers

BP to Pay $175 Million to Settle Claims It Hid Spill Size by Margaret Cronin Fisk and Laurel Brubaker Calkins, June 2, 2016, Bloomberg

BP Plc said it agreed to pay $175 million to settle claims by U.S. investors that its managers lied about the size of the 2010 Gulf of Mexico oil spill to prop up its stock price, removing the company’s last major overhang from the disaster.

The investors, who blamed BP for massive losses when the true scope of the spill was revealed, had sought as much as $2.5 billion. The settlement averts a trial that was set for July in Houston federal court.

The settlement announcement Thursday came shortly after a ruling by U.S. District Judge Keith Ellison to narrow the evidence that could have been presented to a jury. The decision, which would have benefited BP at trial, limited the management statements that investors could claim affected the stock price.

BP shares plunged by more than 40 percent in the weeks after the April 2010 disaster, as it became clear the company couldn’t immediately contain the spill. More than 4 million barrels of oil escaped into the Gulf of Mexico during the 87 days London-based BP took to control the well.

The investors’ lawsuit, led by the public employee pension funds of New York and Ohio, revolved around statements made shortly after the Deepwater Horizon drilling rig blew up in April 2010. Those statements also were central to BP’s agreement in 2012 to pay $525 million to resolve claims by the Securities and Exchange Commission that the London-based company underestimated the size of the spill to bolster stock prices. BP also pleaded guilty to a felony count of obstruction of Congress related to spill estimates. “Investors saw their stock prices plummet after the Deepwater Horizon explosion,” said Jennifer Freeman, a spokeswoman for the New York Comptroller’s Office. “This settlement helps compensate investors for their losses.”

BP has set aside $56.4 billion so far for the disaster, according to an April regulatory filing.

The company’s cumulative pre-tax charge to earnings doesn’t show a complete picture of the company’s financial hit from the spill. As part of funds paid out to stop and clean up the spill and compensate victims, BP has agreed to a series of deals with different groups harmed by the disaster. It isn’t clear how much remains to be paid under all of these agreements.

In 2012, BP agreed to pay $4 billion to resolve criminal charges tied to pollution violations, misleading Congress and manslaughter for the deaths of 11 rig workers killed in the initial explosion.

In a separate deal that year, BP agreed to pay private property and economic-loss claims by hundreds of thousands of individuals and businesses in the five Gulf states, although it excluded whole categories of business claims by casinos, real estate developers and financial institutions. As many of these claims remain unevaluated and unpaid, BP said in April its estimate of $12.9 billion will likely be “significantly higher” once all private claims are processed and paid.

[Who pays for decades of destroyed marine life?]

Last year, BP settled the most expensive slice of its spill litigation by agreeing to pay $20.8 billion over the next 17 years to cover additional pollution violations, financial losses and natural resources damages suffered by state, local and national government entities.

Ellison said in Thursday’s ruling that investors could sue to recover for losses caused by low-ball flow rate estimates BP managers made public during the first two weeks of the spill. Company officials repeatedly estimated that 1,000 to 5,000 barrels of oil were gushing from the well daily, when internal calculations pegged the flow rate at more than 10 times higher.

Ellison rejected investors’ theory that BP kept propping up the share price with other statements that downplayed the financial impact a longer, wider spill would have on the company, saying that’s not the same thing as misrepresenting the flow rate.

Class Action
Ellison previously allowed investors who bought ADR shares immediately after the disaster to sue as a group or class action, while spurning investors who bought before the incident.

The $175 million settlement doesn’t cover other securities-related claims, BP said Thursday.

The case is In Re BP Plc Securities Litigation, 10-md-2185, U.S. District Court, Southern District of Texas (Houston). [Emphasis added]

[Refer also to:

2010 Suttles on Crooks & Liars

2013 06 11 Screen Capture BNN clip on Doug Suttles Appointed CEO Encana

2013 06 11 Screen Capture BNN clip on Doug Suttles Appointed CEO Encana brings sense of urgency to improve operations

Where’s Doug Suttles’ urgency to fix the drinking water aquifers at Rosebud that Encana illegally frac’d in 2004?

Where’s his urgency to supply the community and 40,000 – 50,000 visitors from around the world with safe alternate water?

2013 Jessica Ernst trying to load water tank at Rosebud

Instead of repairing the falling off siding on her home, Ernst spends the repair money hauling water 45 minutes away, one way.

Where’s Doug Suttles’ urgency to fix the Campbell’s contaminated water after Encana greedily frac’d experiments and injected fluids to enhance recovery around their ranch?

2013 06 14 ERCB suddenly closes Campbell water contamination case after 8 years

etc etc etc.

2013: Battered Encana taps former BP exec Doug Suttles, who reportedly covered-up the extent of the Deepwater Horizon disaster, as new CEO

2013: New Encana head Doug Suttles [past senior BP executive who reportedly lied about the Gulf of Mexico Deepwater Horizon disaster] plays cards close to chest

2013: Investors sue BP’s ex-CEO Tony Hayward and Doug Suttles, now Encana CEO; Encana chops executives, five senior managers gone including USA President Jeff Wojahn, who headed the unit when it was accused of collusion

2015: Encana CEO Doug Suttles said Notley called [day after the election] on her own initiative to discuss energy issues: “Let’s make sure we talk as you consider alternatives” ]

This entry was posted in Other Legal. Bookmark the permalink.