BP: The Inside Story
It’s pretty safe to say that BP has been the most-watched company in the world for the last 100+ days since the fire and subsequent oil spill in the Gulf of Mexico began.
There have been two significant changes recently.
The oil-containment cap seems to be holding, and BP is trying to permanently cover the well this week. And second, embattled CEO Tony Hayward was be replaced by American Bob Dudley.
I was at BP’s headquarters in London last week when the change in leadership was made, and I had a chance to interview Bob Dudley. When I sat down to do the interview, he reminded me that we had met a few years ago at the World Economic Forum in Davos, Switzerland.
He said that I was in the CNBC tent where we were doing the interviews, and it was freezing outside. “You saw me shivering,” he said, “and came over to me and said, ‘I think you need this right now.’ And you gave me two hand warmers for my gloves and a cup of coffee.”
I confessed that I had forgotten all about that meeting, but it helped set a nice relaxed atmosphere for the interview.
Dividends and Costs
I was impressed with how Dudley handled himself during the interview. He was confident, calm, apologetic and humble. And he seemed to have a vision about where the company needs to go.
We talked about many things, and I will highlight two points for you here: First, he stressed is that he is very interested in revisiting and reinstating the dividend. He was very specific about that, and said he wants to do so in 2011.
"We’ve seen nothing that indicates we’re grossly negligent in any way."
He said that suspending the dividend “was the right thing to do at the time because we, and no one, had a clear size of the liabilities at that time. The well was flowing, now the well has been capped. We have a better estimate that we put on our books in terms of liabilities. I think we are beginning to see the size and the shape of the liabilities that should give everybody confidence that the company can get back on its feet and restore itself both financially and reputationally.”
That brings us to the second point: the possible outcomes of ongoing investigations, lawsuits and claims and the potential costs to the company. You could see by his body language and spoken language how important this topic is because the outcome could make or break the company’s future. If the investigations conclude that the company was “grossly negligent,” bankruptcy could result.
I asked him how he could really know what the liabilities will be, and he said: “Maria, we’ve seen nothing that indicates we’re grossly negligent in any way. If you look at the marine board testimony last week, you begin to get an idea why we believe that. If we thought we were, we would’ve put bigger numbers [aside] in terms of the liabilities… We don’t know the exact numbers, but I’m confident we’ll get the ship righted again.”
I’ll follow the ongoing costs closely, as they really will dictate the future of the company.
If you’d like to see my whole interview with Bob Dudley, you can click here to watch it now.
As far as the stock is concerned, BP fell from just over $60 before the Gulf spill to around $28 a month ago. Since then, it has had a pretty good bounce back up to the $40 range. We will be talking more about BP as an investment with some of our Wall Street pros, but in the meantime, feel free to weigh in on our Investor Brief poll and let us know if you think BP is an opportunity or a danger right now.
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