BP 2014 Annual Report Download - page 115

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 $43.5 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 and the
measurement of the penalty obligation under the Clean Water Act, 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 48 and Legal proceedings on page 228.
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
2014 2013 2012
Income statement
Production and manufacturing expenses 781 430 4,995
Profit (loss) before interest and taxation (781) (430) (4,995)
Finance costs 38 39 19
Profit (loss) before taxation (819) (469) (5,014)
Less: Taxation 262 73 94
Profit (loss) for the period (557) (396) (4,920)
Balance sheet
Current assets
Trade and other receivables 1,154 2,457
Current liabilities
Trade and other payables (655) (1,030)
Provisions (1,702) (2,951)
Net current assets (liabilities) (1,203) (1,524)
Non-current assets
Other receivables 2,701 2,442
Non-current liabilities
Other payables (2,412) (2,986)
Accruals (169) –
Provisions (6,903) (6,395)
Deferred tax 1,723 2,748
Net non-current assets (liabilities) (5,060) (4,191)
Net assets (liabilities) (6,263) (5,715)
Cash flow statement
Profit (loss) before taxation (819) (469) (5,014)
Finance costs 38 39 19
Net charge for provisions, less payments 939 1,129 4,834
(Increase) decrease in other current and non-current assets (662) (1,481) (998)
Increase (decrease) in other current and non-current liabilities (792) (618) (5,090)
Pre-tax cash flows (1,296) (1,400) (6,249)
The impact on net cash provided by operating activities, on a post-tax basis, amounted to an outflow of $9 million (2013 outflow of $73 million and
2012 outflow of $2,382 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) – 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 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
Financial statements
BP Annual Report and Form 20-F 2014 111