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Notesonnancialstatements
Financial statements
2.Signicantevent–GulfofMexicooilspillcontinued
Impact upon the group income statement and cash ow statement
Thegroupincomestatementfor2010includesapre-taxchargeof$40,935millioninrelationtotheGulfofMexicooilspill.Thiscomprisescostsincurred
upto31December2010,estimatedobligationsforfuturecoststhatcanbeestimatedreliablyatthistimeandrightsandobligationsrelatingtothetrust
fund.Financecostsof$77millionreecttheunwindingofdiscountonthetrustfundliabilityandprovisions.
Theamountoftheprovisionrecognizedduringtheyearcanbereconciledtotheincomestatementchargeasfollows:
$million
Increaseinprovision 30,261
Changeindiscountraterelatingtoprovisions 5
Costschargeddirectlytotheincomestatement 3,339
Trustfundliability–discounted 19,580
Changeindiscountraterelatingtotrustfundliability 240
Recognitionofreimbursementasset (12,567)
(Prot)lossbeforeinterestandtaxation 40,858
Costschargeddirectlytotheincomestatementrelatetoexpenditureincurredpriortotheestablishmentofaprovisionattheendofthesecondquarter
andongoingoperatingcostsoftheGCRO.Theaccountingassociatedwiththerecognitionofthetrustfundliabilityandtheexpenditurewhichwillbe
settledfromthetrustfundisdescribedabove.
Thetotalchargeintheincomestatementisanalysedinthetablebelow.Costschargeddirectlytotheincomestatementinrelationtospill
response,environmentalandlitigationandclaimsarethosethatarosepriortorecordingaprovisionattheendofthesecondquarteroftheyear.
$million
Trustfundliability–discounted 19,580
Changeindiscountraterelatingtotrustfundliability 240
Recognitionofreimbursementasset (12,567)
Other 8
Totalchargerelatingtothetrustfund 7,261
Spillresponse–amountprovided 10,883
–costschargeddirectlytotheincomestatement 2,745
Totalchargerelatingtospillresponse 13,628
Environmental–amountprovided 929
–changeindiscountraterelatingtoprovisions 5
–costschargeddirectlytotheincomestatement 70
Totalchargerelatingtoenvironmental 1,004
Litigationandclaims–amountprovided 14,939
–costschargeddirectlytotheincomestatement 184
Totalchargerelatingtolitigationandclaims 15,123
CleanWaterActpenalties–amountprovided 3,510
Othercostschargeddirectlytotheincomestatement 332
(Prot)lossbeforeinterestandtaxation 40,858
Financecosts 77
(Prot)lossbeforetaxation 40,935
ThetotalamountsthatwillultimatelybepaidbyBPinrelationtoallobligationsrelatingtotheincidentaresubjecttosignicantuncertaintyasdescribed
aboveunderProvisionsandcontingencies.
ResponseoperationsfollowingtheDeepwaterHorizonincidentinApril2010havebeenmanagedbythefederalgovernment’sresponseframework,
whichtransitionedon17DecemberfromtheUniedAreaCommand(UAC)totheGulfCoastincidentmanagementteam(GC-IMT).BoththeUACandnow
theGC-IMTlinktheorganizationsrespondingtotheincidentandprovideaforumforthoseorganizationstomakeconsensusdecisions.Ifconsensus
cannotbereachedtheUSCoastGuardco-ordinatorcarriesthenaldecisiononresponserelatedactionsdeemednecessary.Assuch,theactivities
undertakenbyBPanditssub-contractors,andtheassociatedcosts,arenotwhollywithinBP’scontrol.Thiswillcontinuetobethecaseuntilcontrolofthe
responseoperationstransitionstotheGulfCoastRestorationOrganization.
Inparticular,thecentralizedapprovalprocessestablishedfortheprocurementofmaterials,equipmentandpersonnelhasnotbeenusedforallof
theprocurementactivitythathastakenplace.Thetypesofactivitythatfelloutsidethecentralizedapprovalprocessincludedaspectsofthesurfaceand
shorelineresponse.Numerouspersonnelandvesselswereinvolvedinactivitieswhichincludedskimming,boomdeploymentandshorelinecleanup.Due
tothescaleoftheincidentandtheneedtorespondrapidly,procurementauthoritywasvestedwithstateon-sceneco-ordinators,variousresponsible
partiesandvariousstateandlocalgovernmentauthorities.SolongastheexpensesincurredarefoundtobeconsistentwiththeNationalContingency
Plan,theresponsiblepartieswillbeexpectedtopaythesecosts,regardlessofwhetherornottheywereinvolvedinorapprovedthedecisiontoprocure
theresource.Withthelargenumberofpartiesinvolved,theresultingfundingowsarecomplexandresultedindifcultymaintainingrealtimemonitoring
ofexpenses.
Pre-taxcashowsamountedto$17,658millionandtheimpactonnetcashprovidedbyoperatingactivities,onapost-taxbasis,amountedto
$16,019million.
BPAnnualReportandForm20-F2010 161