City cheers BP as Deepwater saga nears its conclusion

The City today breathed a sigh of relief as BP’s six-year, $57 billion ordeal over the deadly Gulf of Mexico disaster looked to be coming closer to conclusion.

Shares in the company were the Footsie’s top risers, gaining 8.5p, or more than 2%, to 361.6p after the company agreed to pay $175 million (£121 million) to settle claims that it misled shareholders over the size of the oil spill.

Eleven people were killed in April 2010 after an explosion on the Deepwater Horizon drilling rig and a rupture of its Macondo oil well. An estimated four million barrels of oil spewed into the sea in what was American’s largest offshore oil spill.

The class action lawsuit, brought by investors who bought BP’s US-listed shares after the catastrophe, was seen as one of BP’s last major legal hurdles related to the spill.

The investors argued that BP concealed the severity of the situation to keep its shares on solid ground and that they suffered losses when the spill’s true extent was revealed.

The agreement means the claimants will receive just a fraction of the $2.5 billion they sought and that BP should now avoid a trial in Houston federal court next month.

The payment, to be doled out this year and next, comes on top of the $56.4 billion BP had previously set aside the cover the cost of the accident.

The bill includes the largest-ever US criminal fine at $4.5 billion and about $11 billion in damages to local businesses and individuals.

BP’s biggest advance by far came last year, when it agreed to pay $18.7 billion to resolve civil claims brought by the US government, Gulf states and local governments.

Progress in the legal disputes stemming from the Deepwater Horizon will be welcome news for BP, which earlier this year revealed a $6.5 billion loss — its worst for two decades — and thousands of job cuts because of the oil price slump. BP warned, however, that the latest settlement did not bring an end to other securities-related litigation in connection with the Gulf of Mexico spill. The firm is expected to face further legal action from individuals not included in the class action suit.