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100 days after the spill, BP seeks fresh start
Question of the Day
NEW ORLEANS (AP) — One hundred days after the rig explosion that set off the worst offshore oil spill in U.S. history, the oil giant behind it is hoping to move beyond the losses, the gaffes and the live video that ran for weeks of the busted well coughing up massive amounts of crude every second.
BP is replacing CEO Tony Hayward with Managing Director Robert Dudley, selling $30 billion in assets and setting aside $32.2 billion to cover the long-term cost of the spill. It’s also claiming a $9.88 billion tax credit in the second quarter based on the $32.2 billion charge.
BP executives were asked in a conference call Tuesday whether they had discussed the tax credit with U.S. authorities.
“We have followed the IRS regulations as they are currently written,” Mr. Hayward said.
Mr. Hayward, who has been repeatedly criticized for other verbal miscues, will step down as CEO Oct. 1 with benefits valued at more than $18 million. BP is recommending him for a non-executive board position at its Russian joint venture, TNK-BP.
Mr. Hayward told reporters he had been “demonized and vilified” but had no major regrets about his leadership.
“Life isn’t fair,” he said, but he conceded that wasn’t the point. “BP cannot move on in the U.S. with me as its leader.”
The White House was not impressed with Mr. Hayward’s comments.
“What’s not fair is what’s happened on the Gulf,” press secretary Robert Gibbs said Tuesday. “What’s not fair is the actions of some have caused the greatest environmental disaster that our country has ever seen.”
Mr. Dudley defended Mr. Hayward’s leadership but promised changes in light of the environmental disaster. “There’s no question we are going to learn things from this investigation of the incident,” he said.
The catastrophic mile-deep blowout April 20 killed 11 workers, spewed 94 million to 184 million gallons of oil and sapped 35 percent, or $60 billion, of BP’s market value. The company struggled for months to stop the leak before temporarily capping it about two weeks ago. A permanent fix could be just a few weeks away.
BP said it would become a leaner, higher-quality business through its planned sale of $30 billion in assets. The company has already made a start with the $7 billion sale of gas assets in the United States, Canada and Egypt to Apache Corp.
Analysts were disappointed that BP intended to sell so many assets. Oppenheimer & Co. analyst Fadel Gheit said BP should be a 10 percent smaller company after its planned sales but that BP should remain the top oil and gas producer in the U.S., unless it sells off a large portion of its Alaska assets.
Analysts also said BP’s estimate of spill costs was on the conservative side. Gheit predicts BP will eventually pay between $30 billion and $60 billion.
Mr. Dudley pledged that his company will remain committed to the Gulf region even after the busted well is sealed for good — something that may happen soon. A temporary cap has held back the oil for nearly two weeks, a “static kill” effort to plug the well from above is to begin Monday and a relief well could begin sealing the well from the bottom for good with mud and cement days after that.
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