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By Terry Wade and Kristen Hays
HOUSTON, July 2 (Reuters) - BP Plc will pay upto $18.7 billion in penalties to the U.S. government and fivestates to resolve nearly all claims from its deadly Gulf ofMexico oil spill five years ago in the largest corporatesettlement in U.S. history.
The agreement comes on top of the $43.8 billion that BP hasalready set aside for criminal and civil penalties and cleanupcosts.
BP shares jumped more than 5 percent in New York trading asinvestors said the British company, often mentioned as apotential acquisition target, could now turn the page on one ofthe darkest chapters in its century-long history.
Under the agreement with the U.S. Department of Justice andthe states, BP will pay at least $12.8 billion for Clean WaterAct fines and natural resource damages, plus $4.9 billion tostates. The payouts will be staggered over as many as 18 years.The preliminary settlement, subject to all sorts of variables,avoids a substantial amount of further litigation.
The rig explosion on April 20, 2010, the worst offshore oildisaster in U.S. history, killed 11 workers and spewed millionsof barrels of oil onto the shorelines of several states fornearly three months.
The agreement, which still needs to be approved by courts,covers Clean Water Act fines and natural resources damages,along with claims by Alabama, Florida, Louisiana, Mississippiand Texas as well as 400 local government entities.
"This is a realistic outcome which provides clarity andcertainty for all parties," BP Chief Executive Officer BobDudley said in a statement. "For BP, this agreement will resolvethe largest liabilities remaining from the tragic accident."
The size of the settlement was slightly more than the $17.6billion that investors had initially feared BP would be finedfor gross negligence under the Clean Water Act alone.
U.S. District Court Judge Carl Barbier, who has overseen thecase, was expected to rule on that issue later this year. Eventhen, BP would have faced years of lawsuits to address claims bystates and by the federal government under a natural resourcedamage assessment.
The settlement announced Thursday closes off those remainingliabilities.
"This agreement will not only restore the damage inflictedon our coastal resources by the Deepwater Horizon oil spill, itwill also allow Louisiana to continue aggressively fightingcoastal erosion," said Governor Bobby Jindal of Louisiana, thehardest hit state.
It was not immediately clear how BP will fund thesettlement. BP has shed billions in assets to pay for the spill,eroding about one-fifth of the earnings base it had before 2010.
BP's smaller size among the bigger oil majors has made itvulnerable to potential takeovers, especially with the sharpdrop in oil prices.
"Companies have been slightly hesitant to make a bid whilethis has been hanging over it, so I think it does clear the wayfor a potential bid," said Joe Rundle, head of trading atU.K.-based ETX Capital.
BP said the government and the states could jointly demandan acceleration of payments if the company were acquired.
Previous settlements also included an uncapped fundoriginally set at $7.8 billion to compensate individualsclaiming economic harm from the spill.
BP also settled with Transocean Ltd, which ownedthe Deepwater Horizon drilling rig, and Halliburton Co,which worked on the Macondo well.
"Now Gulf Coast restoration can begin in earnest. It's timeto heal the wounds that BP tore in Gulf Coast ecosystems andcommunities," said David Yarnold, CEO of the National AudubonSociety.
(Reporting by Abhiram Nandakumar in Bengaluru, Ron Bousso inLondon and Kathy Finn in New Orleans; Writing by Terry Wade;Editing by Jeffrey Benkoe)
