Under the agreement announced Friday, BP and Cameron International Corp. will drop all claims against one another. BP says the money will be deposited into the $20 billion fund set up to compensate victims of the April 2010 spill.
BP said the agreement was not an admission of liability by either party.
The settlement comes in advance of a federal trial over the spill.
The non-jury trial is set to begin in February and determine fault in the explosion of the BP-leased rig Deepwater Horizon off the Louisiana coast. The oil spill was the nation's worst offshore oil disaster.