BP has reached agreement with Anadarko Petroleum Company to settle all claims between the companies related to the May 2010 Deepwater Horizon explosion and subsequent oil spill. Anadarko, which had a 25 percent interest in the MC252 (Macondo) prospect, and BP have concluded that entering into a settlement is in the best interest of the parties to resolve pending disputes. According to BP, the agreement is not an admission of liability by any party regarding the accident.

Under the settlement agreement, Anadarko will pay BP $4 billion in a single cash payment. BP will apply the payment to the $20 billion trust it established that is available to meet individual, business and government claims, as well as the cost of the natural resource damages. Anadarko will also transfer all of its 25 percent interest in the MC252 lease to BP.

In addition, Anadarko will no longer pursue its allegations of gross negligence with respect to BP. Anadarko and BP have agreed to work cooperatively with respect to indemnified claims, and Anadarko has the opportunity for a 12.5 percent participation in future recoveries from third parties or insurance proceeds cumulatively exceeding $1.5 billion, up to a total cap of $1 billion.

The parties have also agreed to mutual releases of claims against each other. BP has agreed to indemnify Anadarko for certain claims arising from the accident. However, BP”s indemnity excludes civil, criminal or administrative fines and penalties, claims for punitive damages, and certain other claims.

BP previously announced settlements with MOEX, which had a 10 percent interest in the Macondo well, and Weatherford, which provided drilling equipment. Consistent with official investigations that found the accident was the result of multiple causes, involving multiple parties, BP says it is working to ensure that other parties, including Halliburton and Transocean, contribute appropriately.

This settlement agreement will result in the discontinuance of any legal proceedings for co-owner recovery under the Joint Operating Agreement between BP and Anadarko. This settlement will also result in the discontinuance of claims made by BP and Anadarko against each other in the Multi-District Litigation Trial in New Orleans set to commence in February 2012.