BP 2013 Annual Report Download - page 143

2. Significant event – Gulf of Mexico oil spill
As a consequence of the Gulf of Mexico oil spill in April 2010, BP continues to incur costs and has also recognized liabilities for certain future costs.
Liabilities of uncertain timing or amount, for which no provision has been made, have been disclosed as contingent liabilities.
The cumulative pre-tax income statement charge since the incident amounts to $42.7 billion. For more information on the types of expenditure
included in the cumulative income statement charge, see Impact upon the group income statement below. 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, including
developments in relation to the interpretation of business economic loss claims under the Plaintiffs’ Steering Committee (PSC) settlement, see
Provisions and contingent liabilities below.
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 under Provisions and contingent liabilities below, 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 under Risk factors on page 51 and Legal proceedings on page 257.
The impacts of the Gulf of Mexico oil spill on the income statement, balance sheet and cash flow statement of the group are included within the
relevant line items in those statements and are shown in the table below.
$ million
2013 2012 2011
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 430 (1,542) 4,995 (1,191) (3,800) (3,995)
Profit (loss) before interest and taxation (430) 1,542 (4,995) 1,191 3,800 3,995
Finance costs 39 – 19 12 58 52
Profit (loss) before taxation (469) 1,542 (5,014) 1,179 3,742 3,943
Less: Taxation 73 – 94 – (1,387) –
Profit (loss) for the period (396) 1,542 (4,920) 1,179 2,355 3,943
Balance sheet
Current assets
Trade and other receivables 2,457 2,457 4,239 4,178
Current liabilities
Trade and other payables (1,030) (1) (522) (22)
Provisions (2,951) – (5,449) –
Net current assets (liabilities) (1,524) 2,456 (1,732) 4,156
Non-current assets
Other receivables 2,442 2,442 2,264 2,264
Non-current liabilities
Other payables (2,986) – (175) –
Provisions (6,395) – (9,751) –
Deferred tax 2,748 – 4,002 –
Net non-current assets (liabilities) (4,191) 2,442 (3,660) 2,264
Net assets (liabilities) (5,715) 4,898 (5,392) 6,420
Cash flow statement
Profit (loss) before taxation (469) 1,542 (5,014) 1,179 3,742 3,943
Finance costs 39 – 19 12 58 52
Net charge for provisions, less payments 1,129 – 4,834 – 2,699 –
(Increase) decrease in other current and non-current assets (1,481) (1,542) (998) (1,191) (4,292) (4,038)
Increase (decrease) in other current and non-current liabilities (618) – (5,090) (4,860) (11,113) (10,097)
Pre-tax cash flows (1,400) – (6,249) (4,860) (8,906) (10,140)
The impact on net cash provided by operating activities, on a post-tax basis, amounted to an outflow of $73 million (2012 outflow of $2,382 million and
2011 outflow of $6,813 million).
Trust fund
BP established the Deepwater Horizon Oil Spill Trust (the Trust) in 2010, to be funded in the amount of $20 billion, to satisfy legitimate individual and
business claims, 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 fund the qualified settlement funds (QSFs) established under the terms of the settlement
agreements (comprising the Economic and Property Damages (EPD) Settlement Agreement and the Medical Benefits Class Action Settlement) with
the PSC administered through the Deepwater Horizon Court Supervised Settlement Program (DHCSSP), and the separate BP claims programme – see
Provisions and contingent liabilities below for further information. Fines and penalties are not covered by the trust fund.
The funding of the Trust was completed in the fourth quarter of 2012. The obligation to fund the $20-billion trust fund, adjusted to take account of the
time value of money, was recognized in full in 2010 and charged to the income statement.
BP’s rights and obligations in relation to the $20-billion trust fund are accounted for in accordance with IFRIC 5 ‘Rights to Interests Arising from
Decommissioning, Restoration and Environmental Rehabilitation Funds’. An asset has been recognized representing BP’s right to receive
reimbursement from the trust fund. This is the portion of the estimated future expenditure provided for that will be settled by payments from the trust
fund. We use the term ‘reimbursement asset’ to describe this asset. BP will not actually receive any reimbursements from the trust fund, instead
payments will be made directly from the trust fund, and BP will be released from its corresponding obligation. The reimbursement asset is recorded
within other receivables on the balance sheet apportioned between current and non-current elements. The table below shows movements in the
Financial statements
BP Annual Report and Form 20-F 2013 139