BP, Transocean and Halliburton setting aside billions for possible Deepwater settlement

As the civil trial over the Deepwater Horizon litigation inexorably approaches, the second quarter 2012 earnings reports have provided some insight into how BP, Transocean and Halliburton are calculating what they might have to pay and how settlement talks are going, The Houston Chronicle reports. While possible estimates of litigation and settlement costs included in financial statements tend to reflect conservative estimates, companies are required to report these estimates when they believe they can make a reasonable estimation. BP, which released its quarterly report on Monday, brought its total contingency up to $38 billion, booking an $847 million contingent liability for the second quarter. It also plans to pay $1.25 billion in the third quarter to fund a $20 billion Deepwater Horizon Oil Spill Trust that the company established to pay individual claims from the Macondo well spill. It plans to make a final payment of $860 million in the fourth quarter of 2012. Transocean had booked $1.2 billion for a loss contingency at the end of the first quarter, of which it estimated that $222 million would be recoverable through insurance. It has also reported an additional liability contingency of $750 million for the second quarter—a move praised by analysts, who view these estimates as progress in settlement negotiations. Halliburton, which booked a $300 million liability in the first quarter of 2012, has not added any additional liability contingencies for the second quarter. Read the full story here.