The Transocean Ltd. Discoverer Enterprise drill ship, which is leased by BP Plc, works to collect oil at the BP Deepwater Horizon oil spill site in the Gulf of Mexico near the coast of Louisiana, U.S. (Photographer: Derick E. Hingle/Bloomberg)

BP Pays to Avoid Verdict Against `Big, Out-of-Town Oil Company'

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(Bloomberg) -- A BP Plc unit settled a lawsuit claiming it overcharged California for natural gas, averting a trial before a San Francisco jury with the potential for hundreds of millions of dollars in damages.

BP resolved whistle-blower claims that it described as “entirely without merit,” saying in an emailed statement that it "honestly and fairly" fulfilled its obligations to California. The company declined to disclose the terms of the agreement.

"BP has agreed to this compromise settlement for an amount well below what the state demanded in its complaint," according to the statement.

BP’s overcharges amounted to at least $150 million to $300 million, according to the lawsuit. The state sought triple damages plus civil penalties under the False Claims Act.

California alleged that BP systematically billed state and local government facilities at prices that exceeded what the company was allowed to charge under its contracts over almost a decade. In 2014, the state joined a whistle-blower case against BP filed by a former company employee in 2012.

California aimed to "whip up bias against a big, out-of-town oil company that seeks to operate profitably," BP said in a December court filing. "They invite the jurors to punish the company for what it is and for earning a profit."

Representatives for California Attorney General Xavier Becerra didn’t immediately respond to phone and e-mail requests for comment on the settlement.

The case is State of California v. BP America Production Co., CGC-12-522063, California Superior Court, San Francisco County (San Francisco).

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