Oil and gas firm Anadarko Petroleum Corporation and BP have forged a $ 4 billion settlement agreement regarding the Deepwater Horizon event popularly known as the Gulf of Mexico oil spill in 2010 .

Under the terms of the settlement agreement, Anadarko agrees to pay BP $4 billion and both parties have agreed to mutually release claims against each other. As part of this agreement, BP will release its claims against Anadarko for approximately $6.1 billion of outstanding invoices received to date, as well as to forego reimbursement for any future costs related to the event.

In addition, BP will fully indemnify Anadarko for damage claims arising under the Oil Pollution Act, claims for natural resource damages and associated damage-assessment costs, and any claims arising under the relevant Joint Operating Agreement. Anadarko also will transfer its 25-percent interest in Mississippi Canyon block 252 (Macondo) to BP.

"This settlement agreement with BP is the right action for our stakeholders, as it removes significant uncertainty regarding future liabilities and associated risks," Anadarko Chairman and CEO Jim Hackett said in a statement.

"With this issue resolved, we believe focus will return to the tremendous value embedded in our asset base and the company's operational and exploration success that have been under-valued during the last 18 months. Importantly, BP has committed to use the funds to pay the claims of individuals and entities affected by the Deepwater Horizon event," Hackett said.

Citing public filings, Andarko said BP has recorded a charge in excess of $40 billion for total estimated costs associated with the event. To date, BP has invoiced Anadarko an aggregate of $6.1 billion for what BP considers to be Anadarko's 25-percent proportionate share of BP's actual and near-term costs.

"The settlement amount, equivalent to approximately $5 per share after tax, eliminates all significant exposure to historical and future claims. Though the agreement does not provide indemnification against fines and penalties, punitive damages or certain other potential claims, we do not consider these items to represent a significant financial risk to Anadarko. This confidence stems from recent court decisions that released Anadarko from punitive damages and personal injury claims, combined with the findings of various investigations that have confirmed the company had no direct involvement in the drilling of the Macondo well," Hackett said.

Anadarko will record a $4 billion liability associated with this settlement in its third-quarter 2011 financials. The company will remit the settlement amount to BP within 45 days and plans to fund the payment with a combination of cash on hand and drawing down funds from its $5 billion credit facility.

Anadarko expects to receive in excess of $163 million of net proceeds from its insurance providers and plans to repay borrowings under its credit facility with a portion of the proceeds from a possible monetization of its Brazilian subsidiary.

“This settlement represents a positive resolution of a significant uncertainty and it resolves the issues among all the leaseholders of the Macondo well,” Bob Dudley, BP group chief executive, for his part, said.

“There is clear progress with parties stepping forward to meet their obligations and help fund the economic and environmental restoration of the Gulf. It’s time for the contractors, including Transocean and Halliburton, to do the same,” Dudley said.

BP previously announced settlements with MOEX, which had a 10 per cent 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 said it is working to ensure that other parties, including Halliburton and Transocean, contribute appropriately.

Multiple official investigations, including those conducted by the Presidential Commission and the Marine Board of Investigation, found that conduct by those parties contributed to the accident. The issuance of regulatory violations recent to BP, Transocean and Halliburton by the US Department of Interior demonstrates that the contractors responsible for well control and cementing, not just the operator, should be held accountable for their conduct.

"From the outset, BP has committed to paying all legitimate claims and fulfilling its obligations to the Gulf Coast communities under the Oil Pollution Act. BP has to date paid out more than $7 billion," BP said in a separate statement.