CDVIQ Cal Dive International Inc (CE)

BP PLC has agreed to pay Cal Dive International Inc. more than $3.5 million for damages tied to the Deepwater Horizon oil spill, which six years ago spewed millions of barrels of oil into the Gulf of Mexico and triggered a six-month drilling moratorium.

Cal Dive, an underwater welding, repair and construction business that filed for chapter 11 protection last year, is urging the judge overseeing its bankruptcy to approve the settlement. If approved, the payout would close the book on a lawsuit the company filed in federal court in 2013 seeking compensation for lost revenue and business opportunities tied to the spill and subsequent drilling ban.

Cal Dive says it can't afford to pursue the lawsuit any further and that the $3.53 million payout is in the best interest of its creditors. The judge is set to consider approval of the deal at a hearing Friday in a Wilmington, Del.

The Cal Dive settlement comes on the heels of a major ruling earlier this month in which U.S. District Judge Carl Barbier, who is overseeing thousands of spill-related lawsuits, signed off on an estimated $20 billion settlement, resolving years of litigation over the 2010 spill.

After the disaster, a number of companies operating on the Gulf Coast, including Cal Dive, filed lawsuits against BP and others for hindering their businesses through actions leading up to and following the spill. Those lawsuits were eventually consolidated in a trial before Judge Barbier.

During the trial, the judge ruled that BP had been "grossly negligent" and found evidence of "willful misconduct" in the explosion that killed 11 rig workers and ultimately released about 3.2 million barrels of oil into the Gulf of Mexico, the largest marine oil spill in U.S. history. The judge allocated 67% of the blame for the incident to BP, court papers show.

In the penalty phase of the trial last month, Judge Barbier ruled BP wasn't liable for losses related to the six-month moratorium on deep-water drilling imposed by the federal government following the catastrophe.

"In light of Judge Barbier's recent ruling limiting the scope of the BP entities' liability for claims arising from the government imposed moratorium, the risks associated with continued litigation are considerably enhanced," lawyers for Cal Dive said in Monday's court papers. Without the settlement, the lawyers say it could take years to resolve the "extremely complicated" litigation.

Cal Dive sued BP over a long list of alleged damages related to the spill, the government-imposed ban and damage to its ships caused by the oil. In the lawsuit, Cal Dive said BP knew about "significant problems" at the Deepwater Horizon rig and then "downplayed the severity of the spill and was unprepared for the massive cleanup effort required."

BP declined to comment Tuesday. But the oil giant didn't admit any wrongdoing, according to court papers, and the agreement stipulates that the payout to Cal Dive is "purely by way of compromise and settlement."

In return for the payment, Cal Dive is releasing BP and its affiliates from "all past, present or future claims" related to the spill and the moratorium, and the company will withdraw from all class-action lawsuits. It also agreed not to publicly disparage BP.

Houston-based Cal Dive sends divers to install and repair underwater oil and gas drilling platforms, pipes and other infrastructure in the Gulf of Mexico. It also operated in Mexico, Australia, Indonesia, Malaysia and other countries through affiliated companies that weren't affected and didn't file for bankruptcy.

Its divers can work at depths as great as 1,000 feet and can stay underwater for up to a month at a time living in hyperbaric chambers. But falling oil prices, a heavy debt load and "unseasonably adverse weather and third-party contractor delays," overcame the business, court papers show.

Cal Dive, which hasn't posted profits since 2009, filed for bankruptcy last year after skipping a $2.2 million interest payment. The company has since been selling off its assets in bankruptcy and winding down its business.

Patrick Fitzgerald contributed to this article.

Write to Tom Corrigan at tom.corrigan@wsj.com

(END) Dow Jones Newswires

April 19, 2016 16:45 ET (20:45 GMT)

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