BP (BP) Agrees To Place $20 Billion In Escrow

According to headlines from the New York Times, BP (NYSE: BP) has agreed in principal to place $20 billion in an escrow account to cover the expenses related to the Gulf oil spill.

This is the exact amount that Democrats have been calling for the company to cough-up.

According to the preliminary terms, BP would have several years to deposit the full amount so it could better manage cash flow.

Pay czar Kenneth Feinberg will reportedly administer the fund.

Shares of BP are rallying on the news. The stock was down over 3% before the news and is now up 1%, although trading is very volatile.

President Obama met with BP executives this morning to discuss the spill and liability. In a speech last night, Obama called the company reckless with its drilling techniques and said the company would be responsible to set aside "whatever resources are required to compensate the workers and business owners who have been harmed."

Late yesterday, government scientists raised the estimated flow rate from the leaking well to 35,000-60,000 barrels of oil per day. Prior estimates had 20,000 to 40,000 barrels leaking per day. BP's containment cap system is collecting approximately 15,000 barrels per day.

If 60,000 barrels per day are leaking into the Gulf, 3.36 million barrels could have leaked from the well so far.

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