Anadarko sells its silence for $4 billion


No one can blame Anadarko Petroleum for jumping at the chance to settle claims from last year’s Macondo oil disaster in the Gulf of Mexico for $4 billion. For that price, it removes a huge cloud of uncertainty that hung over the company. Unlike Macondo’s operator, BP, Anadarko’s share of the claims could have posed a threat to the company’s future.

But in the early days of the disaster, Anadarko was steadfast in its refusal to settle. It also refused to contribute to the $20 billion spill fund that BP established to pay claims related to the spill. Instead, it accused BP of gross negligence and said the British company’s “reckless decisions and actions” caused the disaster. Even as other partners settled with BP, Anadarko held out.

The tactic obviously worked. As a 25 percent owner in the Macondo well, Anadarko could have been on the hook for $5 billion just for the claims fund alone. With the settlement, it shaves a billion off that obligation, plus BP agreed to waive $6.1 billion that BP sought for cleanup costs. BP also agreed to indemnify Anadarko against almost all past and future costs related to the spill. The settlement doesn’t eliminate Anadarko’s exposure to government fines or penalties or civil liabilities such as punitive damages.

Investors were relieved by the settlement. Anadarko’s shares rose $3.87 Monday, closing at $74.44. The big winner, though, may actually be BP. Both companies were quick to note that the settlement wasn’t an admission of liability by either party, but by buying Anadarko’s silence, BP eliminates that pesky gross negligence claim. Had Anadarko chosen to pursue that and prevailed, it would have been both costly and embarrassing for BP.

Now, the most adamant holdout in the legal aftermath of the Deepwater Horizon is the rig’s owner, Transocean.

Loren Steffy

2 Responses

  1. Lunchtime O'booze says:

    Shurely “buying” someone’s silence means giving them money. Since when has “buying” meant ending up with $4billion from the person you are buying from. Are they not supposed to end up with more money and me less?

    I must get out and shop more often, gee I could make millions! I guess if I buy a new Porsche they will have to give me the Porsche AND loadsa money! Its a winner!!!

    Steffy you truly are a business savant!

  2. Sandy says:

    Steffy: “Anadarko was steadfast in its refusal to settle” is called a negotiating position. Besides the market realized long ago that they were stuffed and this position would not hold. Sure enough they settled and at a rate worse off than MOEX. That doesn’t look too smart now does it?
    You need to look at some of the reporters who understand these things – like the Financial Times. But then I don’t think you read you just spout (cont’d Page 94)