BP 2012 Annual Report Download - page 196

2. Significant event – Gulf of Mexico oil spill
As a consequence of the Gulf of Mexico oil spill, as described on pages 59-62, BP continues to incur costs and has also recognized liabilities for future
costs. Liabilities of uncertain timing or amount and contingent liabilities have been accounted for and/or disclosed in accordance with IAS 37 ‘Provisions,
Contingent Liabilities and Contingent Assets’. These are discussed in further detail in Note 36 for provisions and Note 43 for contingent liabilities. BP’s
rights and obligations in relation to the $20-billion trust fund which was established in 2010 are accounted for in accordance with IFRIC 5 ‘Rights to
Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds’. Key aspects of the accounting for the oil spill are
summarized below.
The financial impacts of the Gulf of Mexico oil spill on the income statement, balance sheet and cash flow statement of the group are shown in the table
below. Amounts related to the trust fund are separately identified.
The cumulative income statement charge does not include amounts for obligations that BP considers are not possible, at this time, to measure reliably.
For further information see Note 43.
The total amounts that will ultimately be paid by BP in relation to all the obligations relating to the incident are subject to significant uncertainty and the
ultimate exposure and cost to BP will be dependent on many factors, as discussed in Note 43, including in relation to any new information or future
developments. These could have a material impact on our consolidated financial position, results of operations and cash flows. The risks associated with
the incident could also heighten the impact of the other risks to which the group is exposed as further described in Risk factors on pages 38-44.
$ million
2012 2011 2010
Total
Of which:
amount related
to the trust
fund Total
Of which:
amount related
to the trust
fund Total
Of which:
amount related
to the trust
fund
Income statement
Production and manufacturing expenses 4,995 (1,191) (3,800) (3,995) 40,858 7,261
Profit (loss) before interest and taxation (4,995) 1,191 3,800 3,995 (40,858) (7,261)
Finance costs 19 12 58 52 77 73
Profit (loss) before taxation (5,014) 1,179 3,742 3,943 (40,935) (7,334)
Less: taxation 94 – (1,387) – 12,894 –
Profit (loss) for the period (4,920) 1,179 2,355 3,943 (28,041) (7,334)
Balance sheet
Current assets
Trade and other receivables 4,239 4,178 8,487 8,233 5,943 5,943
Current liabilities
Trade and other payables (522) (22) (5,425) (4,872) (6,587) (5,002)
Provisions (5,449) – (9,437) – (7,938) –
Net current liabilities (1,732) 4,156 (6,375) 3,361 (8,582) 941
Non-current assets
Other receivables 2,264 2,264 1,642 1,642 3,601 3,601
Non-current liabilities
Other payables (175) – – – (9,899) (9,899)
Provisions (9,751) – (5,896) – (8,397) –
Deferred tax 4,002 – 7,775 – 11,255 –
Net non-current liabilities (3,660) 2,264 3,521 1,642 (3,440) (6,298)
Net assets (5,392) 6,420 (2,854) 5,003 (12,022) (5,357)
Cash flow statement
Profit (loss) before taxation (5,014) 1,179 3,742 3,943 (40,935) (7,334)
Finance costs 19 12 58 52 77 73
Net charge for provisions, less payments 4,834 – 2,699 – 19,354 –
(Increase) decrease in other current and non-current assets (998) (1,191) (4,292) (4,038) (12,567) (12,567)
Increase (decrease) in other current and non-current liabilities (5,090) (4,860) (11,113) (10,097) 16,413 14,828
Pre-tax cash flows (6,249) (4,860) (8,906) (10,140) (17,658) (5,000)
The impact on net cash provided by operating activities, on a post-tax basis, amounted to $2,382 million (2011 $6,813 million and 2010 $16,019 million).
Trust fund
In 2010, BP established the Deepwater Horizon Oil Spill Trust (the Trust) to be funded in the amount of $20 billion (the trust fund) over the period to the
fourth quarter of 2013, which is available to satisfy legitimate individual and business claims that were previously administered by the Gulf Coast Claims
Facility (GCCF), state and local government claims resolved by BP, final judgments and settlements, state and local response costs, and natural resource
damages and related costs. The Trust is available to satisfy claims that were previously processed through the transitional court-supervised claims
facility, to fund the qualified settlement funds (QSFs) established under the terms of the settlement agreements with the Plaintiffs’ Steering Committee
(PSC) administered through the Deepwater Horizon Court Supervised Settlement Program (DHCSSP), and the separate BP claims programme – see
below for further information. Fines, penalties and claims administration costs are not covered by the trust fund. The establishment of the trust fund
does not represent a cap or floor on BP’s liabilities and BP does not admit to a liability of this amount.
In 2010, BP contributed $5 billion to the fund, and further regular contributions totalling $5 billion were made in 2011. During 2011, BP also contributed
the cash settlements received from MOEX, Weatherford and Anadarko, amounting in total to $5.1 billion. A further cash settlement from Cameron was
received in January 2012 and was also contributed to the trust fund. As a result of these accelerated contributions and BP’s regular contributions, the
$20-billion commitment was paid in full during 2012. The income statement charge for 2010 included $20 billion in relation to the trust fund, adjusted to
take account of the time value of money.
194 Financial statements
BP Annual Report and Form 20-F 2012