BP 2015 Annual Report Download - page 125

2. Significant event – Gulf of Mexico oil spill – continued
The magnitude and timing of all possible obligations in relation to the Gulf of Mexico oil spill continue to be subject to a high degree of uncertainty. Any
such possible obligations are therefore contingent liabilities and, at present, it is not practicable to estimate their magnitude or possible timingof
payment. Furthermore, other material unanticipated obligations may arise in future in relation to the incident.
Impact upon the group income statement
The amount of the provision recognized during the year can be reconciled to the charge to the income statement as follows:
$ million
2015 2014 2013
Cumulative since
the incident
Net increase in provision 11,886 1,327 1,860 56,591
Change in discount rate relating to provisions (333) 2 (5) (314)
Costs charged directly to the income statement 156 114 136 4,514
Trust fund liability – discounted –– – 19,580
Change in discounting relating to trust fund liability –– – 283
Recognition of reimbursement asset, net –(662) (1,542) (20,000)
Settlements credited to the income statement –– (19) (5,681)
(Profit) loss before interest and taxation 11,709 781 430 54,973
Finance costs 247 38 39 478
(Profit) loss before taxation 11,956 819 469 55,451
The group income statement for 2015 includes a pre-tax charge of $11,956 million (2014 pre-tax charge of $819 million) in relation to the Gulf of
Mexico oil spill. The costs charged within production and manufacturing expenses in 2015 include $9.4 billion for the amounts provided under the
Agreements, as well as the ongoing costs of operating the Gulf Coast Restoration Organization (GCRO), business economic loss claims, claims
administration costs, legal and litigation costs. Finance costs of $247 million (2014 $38 million) reflect the unwinding of the discount on payables and
provisions. The cumulative amount charged to the income statement to date comprises spill response costs arising in the aftermath of the incident,
amounts charged for the Agreements, GCRO operating costs, amounts charged upon initial recognition of the trust obligation, litigation, claims,
environmental and legal costs not paid through the Trust and estimated obligations for future costs that can be estimated reliably at this time, net of
settlements agreed with the co-owners of the Macondo well and other third parties.
The total amount recognized in the income statement is analysed in the table below.
$ million
2015 2014 2013
Cumulative since
the incident
Trust fund liability – discounted –– – 19,580
Change in discounting relating to trust fund liability –– – 283
Recognition of reimbursement asset –(662) (1,542) (20,000)
Other ––– 8
Total (credit) charge relating to the trust fund –(662) (1,542) (129)
Environmental – amount provided 5,393 190 47 8,527
– change in discount rate relating to provisions (149) 2 (5) (130)
– costs charged directly to the income statement 59 – – 129
Total charge relating to environmental 5,303 192 42 8,526
Spill response – amount provided –– (113) 11,465
– costs charged directly to the income statement –– – 2,839
Total (credit) charge relating to spill response –– (113) 14,304
Litigation and claims – amount provided, net of provision derecognized 5,832 1,137 1,926 32,428
– change in discount rate relating to provisions (74) – – (74)
– costs charged directly to the income statement –– – 184
Total charge relating to litigation and claims 5,758 1,137 1,926 32,538
Clean Water Act penalties – amount provided 661 – – 4,171
– change in discount rate relating to provisions (110) – – (110)
Total charge relating to Clean Water Act penalties 551 – – 4,061
Other costs charged directly to the income statement 97 114 136 1,354
Settlements credited to the income statement –– (19) (5,681)
(Profit) loss before interest and taxation 11,709 781 430 54,973
Finance costs 247 38 39 478
(Profit) loss before taxation 11,956 819 469 55,451
The total amounts that will ultimately be paid by BP in relation to all obligations relating to the incident remains subject to uncertainty as described
under Provisions and contingent liabilities above.
BP Annual Report and Form 20-F 2015 121
Financial statements