Friday, October 1, 2010

BP (NYSE:BP) Offers Gulf Assets as Collateral for Escrow Fund

BP (NYSE:BP) said today its assets in the Gulf of Mexico will used as collateral for the $20 billion escrow fund set aside to pay for claims.

The total costs for the oil giant so far are $11.2 billion, with $806 million paid out in over 44,000 claims from businesses and individuals hurt from the oil spill.

Part of the collateral for the fund will include royalty interest from oil and gas production from projects in the region, including Na Kika, Mars, Mad Dog and Thunder Horse, among others.

Lamar McKay, chairman and president of BP America Inc. said, “The pledging of these assets underscores our commitments to the trust which we set up to pay all legitimate claims arising from the tragedy.”

The assets were offered as collateral because of the uncertainty of oil prices holding strong. New CEO Bob Dudley said if oil prices hold, the company should continue to perform strongly and shouldn't have any problems meeting obligations.

If oil prices do fall, the collateral would be in place to back up any shortfall.

Dudley is confident enough to believe there shouldn't be a problem in bringing the dividend back to shareholders soon, although that is a decision of the board of directors of the company.

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