Bp PLC Settlement with Plaintiffs' Steering Committee Conference Call

Mar 04, 2012 AM EST
Thomson Reuters StreetEvents Event Transcript
E D I T E D   V E R S I O N

BP.L - BP PLC
Bp PLC Settlement with Plaintiffs' Steering Committee Conference Call
Mar 04, 2012 / 04:30PM GMT 

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Corporate Participants
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   *  Jessica Mitchell
      BP PLC - Group IR Director
   *  Brian Gilvary
      BP PLC - CFO
   *  Rupert Bondy
      BP PLC - Group General Counsel

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Conference Call Participants
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   *  Alejandro Demichelis
      Bank of America Merrill Lynch - Analyst
   *  Douglas Terreson
      ISI Group - Analyst
   *  Lucy Haskins
      Barclays Capital - Analyst
   *  Irene Himona
      Societe Generale - Analyst
   *  Edward Westlake
      Credit Suisse - Analyst
   *  Martijn Rats
      Morgan Stanley - Analyst
   *  Pavel Molchanov
      Raymond James - Analyst
   *  Peter Hutton
      RBC Capital Markets - Analyst
   *  Jon Rigby
      UBS - Analyst
   *  Fred Lucas
      JPMorgan - Analyst
   *  Maurizio Carulli
      AXA - Analyst
   *  Blake Fernandez
      Howard Weil Inc. - Analyst
   *  Stuart Joyner
      Investec - Analyst
   *  Lucas Herrmann
      Deutsche Bank - Analyst
   *  Neill Morton
      Berenberg Bank - Analyst
   *  Bertrand Hodee
      Kepler - Analyst

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Presentation
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 Jessica Mitchell,  BP PLC - Group IR Director   [1]
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 Hello and welcome. My name is Jess Mitchell, BP's Head of Investor Relations and I have here with me Brian Gilvary, BP's Chief Financial Officer who will host today's discussion on the proposed settlement between BP and the Plaintiff's Steering Committee to resolve the substantial majority of legitimate economic loss and medical claims arising from the Deepwater Horizon incident.

 Also with us is Rupert Bondy, BP's General Counsel, who will be able to address any issues related to the legal aspects of this proposed settlement.

 As usual, before we start, I'd like to highlight that we may make forward reference to estimates, plans and expectations that are forward-looking statements. Actual outcomes could differ materially due to factors already noted in our press release of March 3 and those noted in our UK Public and SEC filings. Please refer to our annual report and accounts and Form 20-F and other public filings available on our website.

 Let me now hand over to Brian.

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 Brian Gilvary,  BP PLC - CFO   [2]
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 Thank you, Jess. Firstly, I'd like to thank everybody for joining us at short notice, especially on a Sunday. We thought it would be useful to make ourselves available today to answer any questions you may have arising from the settlement with the Plaintiff's Steering Committee and the ongoing legal processes associated with the Gulf of Mexico oil spill.

 Recognizing that this is complex, I thought I'd start by taking a few minutes to go through the key points of the proposed settlement and then primarily we are here to give you a chance to put any questions you may have of us.

 From the outset, BP has always made clear our intentions to meet our obligations to the Gulf of Mexico community. The $20b Trust Fund from which we expect this proposed settlement to be paid was established to satisfy legitimate individual and business claims, but also a number of other costs including natural resource damages and state and local government claims. To date, BP has paid at least $6.1b from the Trust to resolve claims from individuals and businesses, and the proposed settlement represents an important step in ensuring we complete the process of delivering on our commitments.

 As noted in our press release, BP estimates that the cost of the proposed settlement will be approximately $7.8b. It is expected to be paid from the $20b Trust and would have no impact on our Group cash flow. The proposed settlement is not expected to result in any increase in the $37.2b net charge previously taken against income, which included the total $20b charge taken in respect of the Trust.

 A major component of the proposed settlement is the payment of claims on a claims-made basis according to protocols under a court supervised claims process. The ultimate cost of the proposed settlement will therefore depend upon the actual outcomes of this process. BP's current expectation is that the provision in our financial statements for litigation and claims, which includes the claims covered by this proposed settlement, will increase by approximately $2.1b. So the amount to be paid from the trust that can now further be provided with no net impact to the income statement is expected to reduce from approximately $5.5b estimated at the end of the fourth quarter 2011, to approximately $3.4b. In line with our normal procedures, BP will re-evaluate the assumptions underlying this estimate on a quarterly basis as more information becomes available.

 Under the proposed settlement, class members would release and dismiss their claims against BP including any claims for punitive damages.

 The proposed settlement also provides that, to the extent permitted by law, BP will assign the Plaintiff's Steering Committee certain of its claims, rights and recoveries against Transocean and Halliburton for damages not recoverable from BP.

 The proposed settlement is not an admission of liability by BP. We have previously said that we would prepare vigorously for trial but that we would be prepared to settle if we can do so on fair and reasonable terms. We view this proposed settlement as fair and reasonable for all parties and it represents the most significant step to date in resolving the legal processes around this incident. It marks progress in resolving issues with the Plaintiffs' Steering Committee which acts on behalf of the substantial majority of individual and business plaintiffs in the MDL trial proceedings.

 The proposed settlement is subject to the conclusion of definitive settlement agreements and preliminary and final court approvals, but nonetheless provides a clear path the reducing uncertainty around the legal proceedings.

 The proposed settlement does not include claims against BP made by the United States Department of Justice, or other federal agencies, by the states and local government or certain other claims against BP, such as securities and shareholder claims pending in MDL 2185, and claims based solely on the deepwater drilling moratorium and/or the related permitting process.

 We remain prepared to settle with other claimants in the proceedings where we are able to do so on reasonable terms, but equally we will continue to prepare for trial should this not be possible. This will now flow in accordance with whatever revised trial schedule is determined by the court.

 So that's a brief summary of where we are. Rupert and I will now take your questions. Of course, there are many details regarding the proposed settlement still to be finalized, so we may have to pass on some points but we will share with you what we can at this stage.

 In the interests of everybody's time over a weekend, I'd ask you that you limit your questions just to issues associated with the Gulf of Mexico legal processes and this latest development.

 With that I'd like to hand back over to Jess to queue the calls.



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Questions and Answers
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 Jessica Mitchell,  BP PLC - Group IR Director   [1]
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 Thank you, Brian. So the first question comes from Alejandro Demichelis of BofA Merrill Lynch. Go ahead, Alejandro.

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 Alejandro Demichelis,  Bank of America Merrill Lynch - Analyst   [2]
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 Yes, good afternoon, gentlemen, and thanks, Jess. Just one question from my side. You're saying that with this you've covered the majority of the full claim. Maybe you can give us some kind of indication of what you think has been left outside of this settlement.

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 Brian Gilvary,  BP PLC - CFO   [3]
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 Thank you, Alejandro, I'll pass over to Rupert, but specifically this is associated with the class action lawsuits governed by the Plaintiffs' Steering Committee. It will not include any settlements around natural resource damages or state and local claims. But, Rupert, do you want to talk about the actual class itself?

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 Rupert Bondy,  BP PLC - Group General Counsel   [4]
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 Yes, just to supplement what Brian has said, it doesn't include the civil claims brought by the United States Government or by individual states. It doesn't include either all individual and business economic loss claims, for example, the moratorium claims which we do not believe to have legal merit. It doesn't include every category of property claim but, as we have said in our release, it does in our view include the substantial majority of legitimate economic loss claims.

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 Alejandro Demichelis,  Bank of America Merrill Lynch - Analyst   [5]
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 And can you put a number what's left outside of this?

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 Brian Gilvary,  BP PLC - CFO   [6]
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 So, Alejandro, as I mentioned earlier, the $37.2b charge that we took at the end of 4Q on a net basis. We do not believe we will need to increase that charge. That was our best estimate at the end of 4Q, we've run this settlement through our numbers and, again, as of today we believe that still represents our best estimate and there is a breakdown of that in the accounts of the 4Q results.

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 Alejandro Demichelis,  Bank of America Merrill Lynch - Analyst   [7]
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 Okay great, thank you.

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 Jessica Mitchell,  BP PLC - Group IR Director   [8]
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 Our next question comes from Doug Terreson in the United States, from ISI. Go ahead Doug.

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 Douglas Terreson,  ISI Group - Analyst   [9]
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 Good morning, everybody, and good afternoon. Congratulations on your continued progress with resolution here. So my question's couple-fold, one and this goes back to the previous question, is it reasonable to assume that majority of the legitimate, of the litigation and claims provision that's left is state and local government?

 And number two, weren't Alabama and Louisiana original participants in the MDL and so why were they not included in the settlement? Can you just comment to the degree possible on how you plan to handle these non-federal governmental claims in the future?

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 Rupert Bondy,  BP PLC - Group General Counsel   [10]
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 Yes, there were a couple of states -- there are a couple of states that have brought claims in the MDL and those have not been settled with this settlement. We've said all along that we'd like to resolve all claims if we can do so on a fair -- both a fair and reasonable basis and that is the case of the states just as it is the case for other claims outside this settlement.

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 Douglas Terreson,  ISI Group - Analyst   [11]
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 Okay thanks a lot.

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 Brian Gilvary,  BP PLC - CFO   [12]
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 Thanks, Doug.

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 Jessica Mitchell,  BP PLC - Group IR Director   [13]
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 Our next question is from Lucy Haskins of BarCap. Go ahead, Lucy.

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 Lucy Haskins,  Barclays Capital - Analyst   [14]
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 Hi, I wondered if I could ask, to an outsider it looks like it might have been harder to strike a deal with 116,000 litigants even under a class action relative to settlement with just, let's say, the Department of Justice. Could I ask where we are in terms of negotiations with the other parties which you have yet to settle with and what might be inhibiting the pace of negotiations there?

 And the second thing is, do we have any sort of indication in terms of a revised trial schedule yet, because I think some of the commentators in the UK have been suggesting 45 days for the trail in line with the settlement terms for this particular case.

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 Rupert Bondy,  BP PLC - Group General Counsel   [15]
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 It's Rupert here. I'm afraid I just don't think it's appropriate to comment on settlement discussions with other parties, I just don't think we can say anything beyond the fact that we would like to reach settlement if we can do so on reasonable terms.

 In terms of the trial schedule the judge has said, Judge Barbier has said he's going to convene a settlement conference to seek the views of the parties and the court will then decide on a revised trial schedule and I don't think we can speculate beyond that.

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 Lucy Haskins,  Barclays Capital - Analyst   [16]
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 So we don't have a feel for whether that's just a kind of one week postponement as we had a week ago or whether it is going to be something more substantive?

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 Rupert Bondy,  BP PLC - Group General Counsel   [17]
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 I don't think we can speculate.

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 Brian Gilvary,  BP PLC - CFO   [18]
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 It's really a matter for the judge, Lucy, we can't comment on that.

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 Lucy Haskins,  Barclays Capital - Analyst   [19]
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 Sure and when is that settlement conference scheduled for?

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 Rupert Bondy,  BP PLC - Group General Counsel   [20]
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 I don't think he's actually set a date but I image that that conference will be held within a matter of days or a week or two.

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 Lucy Haskins,  Barclays Capital - Analyst   [21]
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 Thanks very much.

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 Jessica Mitchell,  BP PLC - Group IR Director   [22]
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 Next, Irene Himona from SocGen. Go ahead, Irene.

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 Irene Himona,  Societe Generale - Analyst   [23]
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 Yes, good afternoon. I wonder what the key risks or uncertainty is that in the next 45 days the settlement you announced a couple of days ago may not actually be signed? Thank you.

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 Rupert Bondy,  BP PLC - Group General Counsel   [24]
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 Well, the settlement is subject to finalized settlement agreements being signed, as you've observed. Obviously the agreement in principle is itself a significant step and the parties feel able to sign that and announce it in the expectation that it will lead to definitive agreements being signed. There have been detailed discussions over many aspects of the definitive agreements although, of course, there are aspects that remain to be finalized. So we can't say for sure but we have done this in the good faith expectation, and I think this is the case for the PSC as well, that the definitive agreements, it will be possible to finalize them. Of course the process has been subject to court mediation so the court has been involved through the magistrate judge in the mediation to date.

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 Irene Himona,  Societe Generale - Analyst   [25]
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 Thank you.

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 Jessica Mitchell,  BP PLC - Group IR Director   [26]
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 We'll now go to Ed Westlake in the US from Credit Suisse. Ed.

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 Edward Westlake,  Credit Suisse - Analyst   [27]
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 Hi and thanks very much for this call, very helpful. Just on, I guess, your $37.2b and you're saying that you don't need to believe that will need to increase. That's a comment that you think is also applicable including state and local government claims and natural resource damages?

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 Brian Gilvary,  BP PLC - CFO   [28]
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 Correct. At the moment, Ed, as I said, at the end of the each quarter we make an assessment based on our best estimates of what we believe the net charge is. The only thing that's changed is within the charge we've increased the provision around the claims associated with this settlement by $2.1b, but in terms of the overall charge that doesn't affect the income statement.

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 Edward Westlake,  Credit Suisse - Analyst   [29]
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 And then from your comments it seems as if effectively you assign any claims, in terms of RIG and Halliburton to the settlement and then the plaintiffs have to go after RIG and Halliburton themselves and that takes you out of the picture with the settlement? Is that my understanding?

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 Brian Gilvary,  BP PLC - CFO   [30]
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 I'll ask Rupert to comment on that.

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 Rupert Bondy,  BP PLC - Group General Counsel   [31]
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 Yes, in effect the PSC will step into our shoes in pursuing the claims against Halliburton and Transocean.

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 Edward Westlake,  Credit Suisse - Analyst   [32]
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 And so that leaves the outstanding lawsuits just being the civil claim for the DOJ for Clean Water Act and then the other claims outside the Plaintiffs' Committee.

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 Rupert Bondy,  BP PLC - Group General Counsel   [33]
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 That's right. The principle outstanding claims against BP will be the United States Government and the states. There are other private claims not covered by the settlement as we've disclosed but I think the principle claims will be those.

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 Jessica Mitchell,  BP PLC - Group IR Director   [34]
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 Okay, we'll now move back to the UK, Martijn Rats at Morgan Stanley. Go ahead please, Martijn.

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 Martijn Rats,  Morgan Stanley - Analyst   [35]
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 Yes, good afternoon. I understand that the $7.8b figure is still an estimate but with every estimate there is always a range of uncertainty, I was hoping whether you could give us some idea of what you think the accuracy of that figure is? Can that go up or down by a couple of hundred million over time or are we still talking about uncertainty around this figure of maybe a few billion. Any comment there would be much appreciated.

 Also secondly I want to ask how this $7.8b will be treated for tax purposes. I assume this is all offsetable against taxable income but I just wanted to clarify that.

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 Brian Gilvary,  BP PLC - CFO   [36]
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 So Martijn, we run the calculations every quarter, the number around claims has been pretty stable. The significant difference now with this settlement is around the three components that which weren't in our previous estimate. The first one was around medical which was, at the time, un-estimable so we now have an estimate into medical. Settlements of wetlands and coastal property damages was not in scope, that's something new which has come in as part of this settlement. Then payment of attorney legal fees which will also be within this settlement and determined by the court.

 On the issue of tax credits, yes, all of this will come under -- will have a tax credit associated with it.

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 Martijn Rats,  Morgan Stanley - Analyst   [37]
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 Thanks.

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 Jessica Mitchell,  BP PLC - Group IR Director   [38]
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 Okay, thank you. So we'll now go to Pavel Molchanov from Raymond James. Go ahead please, Pavel.

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 Pavel Molchanov,  Raymond James - Analyst   [39]
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 Thanks very much. On the definitive agreements that you've said you still have to reach, is that a formality or are there actually some substantive points that have yet to be resolved?

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 Brian Gilvary,  BP PLC - CFO   [40]
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 As I understand it, Pavel, there's a specific process that we will now go through, but Rupert can pick up the specifics of it.

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 Rupert Bondy,  BP PLC - Group General Counsel   [41]
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 As in any negotiation we hope that with the agreement in principle we've covered the major terms but we also know, as with any negotiation, that the devil can be in the detail and that no doubt there will be discussion of a number of points to get to the definitive agreements and we'll proceed as expeditiously as possible to finalize them.

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 Pavel Molchanov,  Raymond James - Analyst   [42]
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 Okay and then just a quick follow-up. On the Transocean and Halliburton payments you said that, I think I'm paraphrasing, that PSC will step into BP's shoes in pursuing those claims against the two service contractors. But would BP receive anything if the contractors end up paying or would all of the proceeds go directly to the PSC?

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 Rupert Bondy,  BP PLC - Group General Counsel   [43]
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 Since we are assigning our claims to the PSC it is expected that proceeds would go to the PSC, so it's not contemplated that BP would receive any of the proceeds of claims that are assigned.

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 Pavel Molchanov,  Raymond James - Analyst   [44]
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 I appreciate the clarity on that. Thanks.

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 Jessica Mitchell,  BP PLC - Group IR Director   [45]
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 Over now to Peter Hutton from RBC. Peter.

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 Peter Hutton,  RBC Capital Markets - Analyst   [46]
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 Well, I think one of the questions has just been answered actually which was about whether any subsequent monies from Halliburton from Transocean would offset any of the amounts sounded against BP.

 The other element is that I understand it that within the existing charges that you have is about $3.5b for the Clean Water penalties. Given the increase in provisions on the external things that have been taken does BP still keep to the view that $3.5b is sufficient for the fund and CWA?

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 Brian Gilvary,  BP PLC - CFO   [47]
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 The $3.5b is our estimate based on the Clean Water Act on the assumption and which we firmly believe that BP was not grossly negligent and we continue to hold that number inside the charge of the $37.2b.

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 Jessica Mitchell,  BP PLC - Group IR Director   [48]
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 Okay, we'll now take a question from Jon Rigby from UBS.

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 Jon Rigby,  UBS - Analyst   [49]
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 Thanks, Jess. A few questions. The first is just on the structure of the way that the payments will be controlled and assessed, the $7.8b. Is the process of looking at those, assessing them and paying them out broadly similar to that which occurred for the monies being paid out of the original trust? So what assurance have we that there is still a strict process around BP monies being paid out?

 The second is just, sorry to labor the point but just to go back to the Transocean and Halliburton point is, you paid out significant amounts out of the Trust in terms of cleanup, are you saying that as of now you essentially are not going to seek any kind of restitution from those two companies for amounts paid already, which are pretty large, to date?

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 Brian Gilvary,  BP PLC - CFO   [50]
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 So again, over to Rupert.

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 Rupert Bondy,  BP PLC - Group General Counsel   [51]
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 In terms of the structure at full claims administration, yes, it will be similar. The settlement has a different structure, there are different protocols but there will be a claims administrator, it will not be Mr. Feinberg, there will be an infrastructure to support that administrator, in fact there will likely be some carryover from the GCCF infrastructure and there are well-defined protocols by which compensation will be paid and there are well-defined procedures, subject to finalization and the definitive agreements but there will be well-defined procedures and controls.

 In terms of Transocean and Halliburton, those claims that you've referred to for the cleanup and other costs that BP has already incurred, those are within the claims that are being assigned to the PSC and that is part of the overall settlement agreement that we have reached. It includes many, many different elements and components and that is one of them.

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 Jon Rigby,  UBS - Analyst   [52]
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 Okay, just one follow-up, I guess this is for Brian. Of the $2.1b additional or excess cost of this settlement against where you're accruing, I think you mentioned a number of costs that are in this that were outside the scope of the original provision exercise, would you be able to quantify, maybe in percentage terms of that $2.1b, what is the cost that you had envisaged being higher than you'd envisaged and what is new cost that were beyond the scope of the original provision exercise.

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 Brian Gilvary,  BP PLC - CFO   [53]
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 I think I'll come back to the three areas are payment of attorney fees, settlements of wetland and coastal property damage which was outside of the scope of the original estimate and the medical costs which at the time were an estimate but we actually now have a figure in here. I can't, unfortunately Jon, give you a breakdown of what those percentages look like across the $2.1b.

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 Jon Rigby,  UBS - Analyst   [54]
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 Right, okay. Thank you.

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 Jessica Mitchell,  BP PLC - Group IR Director   [55]
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 We'll now call on Fred Lucas from JPMorgan. Go ahead, Fred.

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 Fred Lucas,  JPMorgan - Analyst   [56]
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 Thanks, Jess. Guys, could you just clarify the GCCF was paying out money through last year by quarter, I think in Q4 the payments out are around $700m. Will the GCCF continue to pay out to claimants running through that separate process, through the escrow, through the claims fund?

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 Brian Gilvary,  BP PLC - CFO   [57]
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 Well, there'll be an interim phase as we transition to the new fund but, again, Rupert can give us the specifics.

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 Rupert Bondy,  BP PLC - Group General Counsel   [58]
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 We will be shifting very quickly to a new administrator but there will be a transitional process in which for a time that administrator may continue to pay under the GCCF protocols. Then we will have the new protocols set up and established and there will be a switch to them. So there won't be, if you like, an interruption in funds flow to claimants but there will be a transitional process which will have several different steps associated with it.

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 Fred Lucas,  JPMorgan - Analyst   [59]
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 Okay and a second question if I may. Can you give us an idea of the time period over which you will utilize the deferred tax asset you have against the provisions?

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 Brian Gilvary,  BP PLC - CFO   [60]
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 The deferred tax asset will be utilized as the profits flow into the United States. You'll see we've talked about, in the 4Q results, the ramp-up in the GoM production that we'll see out of 2014, 2015. But we are comfortable within an assessment of the future profits of the firm at the oil prices that we described as part of 4Q results and are confident that we can actually utilize that tax credit going forward.

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 Fred Lucas,  JPMorgan - Analyst   [61]
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 So do you think you'll have it fully utilized 2014. '15?

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 Brian Gilvary,  BP PLC - CFO   [62]
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 No, sorry, Fred, it will over a run of years but we could easily go out beyond the 2014 period to fully utilize it.

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 Fred Lucas,  JPMorgan - Analyst   [63]
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 Got it. Okay thanks, guys.

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 Jessica Mitchell,  BP PLC - Group IR Director   [64]
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 Okay, so we'll take the next question from Maurizio Carulli of AXA.

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 Maurizio Carulli,  AXA - Analyst   [65]
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 Rupert, hello, and I have a question actually, two questions regarding the Department of Justice if I may. The Department of Justice usually when communicating with counterparts do that in a pretty formal way, usually in writing. Are you prepared to say what sort of communications, formal communications have you received so far from the Department of Justice, and this is the first question?

 The second question, have you had any feedback from them regarding the proposed settlement announced yesterday?

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 Rupert Bondy,  BP PLC - Group General Counsel   [66]
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 I'm afraid I just don't think it's appropriate to comment on the detail of any communications between us and the DOJ. I'm sorry about that and I think that would be true for communications regarding the settlement that we've just announced as well.

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 Maurizio Carulli,  AXA - Analyst   [67]
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 Okay, fair enough.

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 Brian Gilvary,  BP PLC - CFO   [68]
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 Sorry, Maurizio.

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 Jessica Mitchell,  BP PLC - Group IR Director   [69]
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 Okay, let's shift back to the US and take a call from Blake Fernandez of Howard Weil.

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 Blake Fernandez,  Howard Weil Inc. - Analyst   [70]
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 Hi, thanks for taking my question, hopefully you can hear me okay. I just wanted to step back, from an outsider's perspective it sounded like the original plan or strategy was to have a universal comprehensive settlement. Obviously we've parted ways with that and you're now settling on one phase and actually just a portion of that phase and I guess I'm just curious, going forward outside of purely removing some of the uncertainty is there any benefit from a legal standpoint or a negotiating leverage standpoint to having one piece of this out of the way as you begin to have discussions with other parties?

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 Brian Gilvary,  BP PLC - CFO   [71]
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 Well, I'll ask Rupert to give a fuller answer to that but from my perspective this removes a significant amount of uncertainty for the company going forward given the scale of the class action lawsuits that we were looking at around this settlement. So from my perspective it takes out a significant amount of uncertainty in terms of the outlook for the company but also financially.

 Rupert, do you want to go into the specifics again?

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 Rupert Bondy,  BP PLC - Group General Counsel   [72]
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 I think it's been our desire to try to resolve all matters of we can do so on fair and reasonable terms, whether in one big go or a number of slightly smaller ones. Do bear in mind that even before this weekend's settlement we had reached settlements with our working interest owners, with MOEX and with Anadarko and with one or two of the contractors such as Weatherford and Cameron. We see this settlement as a very substantial step forward in resolving the uncertainties associated with the spill as well as in meeting the commitments we've made to pay all legitimate claims to those affected on the Gulf Coast.

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 Blake Fernandez,  Howard Weil Inc. - Analyst   [73]
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 Thank you very much.

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 Jessica Mitchell,  BP PLC - Group IR Director   [74]
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 Our next question comes from Stuart Joyner from Investec.

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 Stuart Joyner,  Investec - Analyst   [75]
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 Good afternoon, everyone, just a quick question actually in terms of the implicit PSC agreement in terms of what it means for their view on the causes of the spill. Obviously the statement that you've given is quite short but would I be over-reading it to say that the PSC have acknowledged either in writing or to yourselves that it was a multi-causal event in terms of the way that the service contractor portion of the liability is being treated.

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 Rupert Bondy,  BP PLC - Group General Counsel   [76]
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 I don't think we can really comment on that. There is no admission of liability by BP but this was a heavily negotiated settlement which the PSC views and I think we view as being fair and reasonable and paying fair and reasonable compensation to the class members that the PSC represent.

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 Stuart Joyner,  Investec - Analyst   [77]
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 Okay, can I just maybe follow-up then and just ask, is there anything in the agreement that can be taken to the DOJ in terms of giving comfort to the BP view around that particular issue of who was to blame.

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 Rupert Bondy,  BP PLC - Group General Counsel   [78]
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 I don't think there will be anything specific in the settlement agreement. Clearly BP has been very clear about its position and what we believe from very early on and nothing has changed that.

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 Stuart Joyner,  Investec - Analyst   [79]
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 And just one final question, in terms of that agreement with the PSC, will the terms of that in full be made public by the court or by yourselves? Or is what we've had so far in the written statement and on this call the information that you're proposing to give at this time?

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 Rupert Bondy,  BP PLC - Group General Counsel   [80]
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 I'm actually not sure about that and --

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 Brian Gilvary,  BP PLC - CFO   [81]
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 Stuart, we'll come back to you post the call on what actually happens around the final agreements and whether they're kept under seal or made public.

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 Stuart Joyner,  Investec - Analyst   [82]
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 Appreciate that. Thanks.

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 Brian Gilvary,  BP PLC - CFO   [83]
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 Okay.

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 Jessica Mitchell,  BP PLC - Group IR Director   [84]
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 Can we now go to Lucas Herrmann from Deutsche Bank. Go ahead, Lucas.

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 Lucas Herrmann,  Deutsche Bank - Analyst   [85]
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 Yes, thanks very much, Jess. Afternoon, gentlemen. Two if I might. Briefly, you've increased the provision for litigation and claims to broadly $9.9b of which you're indicating that $7.8b is effectively applicable to this settlement. You've obviously, well, I'm presuming you've been in discussion with other parties, why would it be unreasonable to assume that the remaining provision is not your best guess for what you'll settle with the local governments and states for plus other outstanding litigation matters?

 And secondly, very briefly, you talk in the statement about a cost of $105m associated with setting up medical bodies, is that included in this $7.8m number or is it [out with].

 And finally, is there any sunset date on the framework at present?

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 Brian Gilvary,  BP PLC - CFO   [86]
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 Okay, so I'll Rupert to comment on the last piece which is effectively what the sunset framework was we had around the Trust fund and how applicable that is under the new regime.

 Lucas, what I'd say is, we have $3.4b, previously $5.5b, but now we have $3.4b that can still be charged -- still sit within the charge as additional provision that we can take. Let's be clear, that cannot go against penalties and fines because effectively that sits within the $20b Trust Fund. So anything around penalties and fines would sit outside of that and we've given you our best estimate of $3.5b around the Clear Water Act. Other areas of penalties and fine are un-estimable by us at this stage.

 The $105m medical is within the $7.8b, our best estimate of the settlement figure.

 Then, Rupert, do you want to pick up the sunset clause and how that works.

------------------------------
 Rupert Bondy,  BP PLC - Group General Counsel   [87]
------------------------------
 Yes. First of all, obviously, there's getting to the definitive agreements and there's the termination right if we can't do that within the next 45 days. Then there are periods in which claims can be submitted and then separate from the claims submission there's the Trust that was established obviously well before this settlement. The dates range, I think, from 2014 to 2016.

------------------------------
 Brian Gilvary,  BP PLC - CFO   [88]
------------------------------
 Lucas, have we answered your questions fully?

------------------------------
 Lucas Herrmann,  Deutsche Bank - Analyst   [89]
------------------------------
 Just going back to the first, Brian, I mean what I was effectively asking is, look there's $2.1b left over in litigation and claims, that litigation and claims at this time are clearly associated with the states in the main. You must have a pretty good idea what you think those costs are going to be, that $2.1b must be a pretty good indication of what you think that cost will be?

------------------------------
 Brian Gilvary,  BP PLC - CFO   [90]
------------------------------
 No, Lucas, what we've done inside the -- within the provision we have an estimate around NRDA, Natural Resources Damages and state claims. So we have that within there but we haven't broken it out as an explicit number, so it already sits within our best estimate today.

------------------------------
 Lucas Herrmann,  Deutsche Bank - Analyst   [91]
------------------------------
 Okay, fine. Thank you.

------------------------------
 Jessica Mitchell,  BP PLC - Group IR Director   [92]
------------------------------
 We'll now go to Neill Morton from Berenberg. Go ahead, Neill.

------------------------------
 Neill Morton,  Berenberg Bank - Analyst   [93]
------------------------------
 Thanks, Jess. Just a couple of clarifications left please. I'd just like, the $20b Trust fund, can you confirm that the $7.8b settlement is neither a floor nor a ceiling and if the final amount is lower than the remaining monies come back to BP.

 Then just secondly, as the GCCF is being superseded by the new payment approach, what happens to the remaining $5b you're due to pay into the Trust fund this year? Thank you.

------------------------------
 Brian Gilvary,  BP PLC - CFO   [94]
------------------------------
 Thanks, Neill. So to be clear, the $7.8b is neither a floor not a cap, it's our best estimate as of today. As claims get processed through the new system we'll be able to recalculate that on a quarterly basis and money only goes out on a claims-made basis with the new protocols we'll have in place.

 Sorry, the second question around GCCF, Neill, was?

------------------------------
 Neill Morton,  Berenberg Bank - Analyst   [95]
------------------------------
 It was just actually into the fund you've still --

------------------------------
 Brian Gilvary,  BP PLC - CFO   [96]
------------------------------
 Yes, I'm sorry, we've now got $3.4b left to pay in this year. The 1Q payment has gone out, the Cameron payment of $250m went into the fund in January, so that will leave $3.4b of cash to leave BP this year to fully fund the $20b Trust.

------------------------------
 Neill Morton,  Berenberg Bank - Analyst   [97]
------------------------------
 Great, thank you.

------------------------------
 Jessica Mitchell,  BP PLC - Group IR Director   [98]
------------------------------
 Right, the next question comes from Bertrand Hodee of Kepler. Go ahead, Bertrand.

------------------------------
 Bertrand Hodee,  Kepler - Analyst   [99]
------------------------------
 Yes, hello, just one question. Within the $20b GCCF how much will be left after what has already been paid to date, and including also this further $7.8b? Can you give us exactly what will be left inside the GCCF.

------------------------------
 Brian Gilvary,  BP PLC - CFO   [100]
------------------------------
 So as of today, to be clear, the GCCF goes to the Trust fund in the same way this new court process goes to the Trust fund. The Trust fund is overseen by a group of trustees and then as claims from GCCF come to the Trust, the Trust signs the money across. Right now in terms of our overall provision, of the $20b as of today we cannot estimate, there's $3.4b of monies set aside which have not yet been provided for but we have a charge associated with it, so there's still $3.4b over and above our best estimates of what sits inside the provision.

------------------------------
 Bertrand Hodee,  Kepler - Analyst   [101]
------------------------------
 Okay thank you.

------------------------------
 Jessica Mitchell,  BP PLC - Group IR Director   [102]
------------------------------
 Right, so at this stage we have no further questions and so I think it just remains for us to thank you for making time on a Sunday to join this call and the IR team will be available to take any further questions or queries from you in the coming days. Thank you all and enjoy the rest of your day.




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