Processing Magazine

BP''s Spill Costs Likely to Stay Below $60 Billion

January 3, 2011

According to the Associated Press, cleanup, government fines, lawsuits, legal fees and damage claims from BP’s Gulf oil spill will likely exceed the $40 billion that BP has publicly estimated, but they''ll be far below the highest estimates made over the summer by legal experts and prominent Wall Street banks, which said costs could near $200 billion. BP will survive the worst oil spill in U.S. history for several key reasons: it has little debt; its global businesses are forecast to generate $26 billion next year in cash flow from operations; the environmental impact of the spill isn''t as bad as feared; and the government seems unlikely to ban BP from Gulf drilling. To bolster its finances, BP has cut its dividend, issued debt and sold more than $21 billion in assets.