BP Launches Image Overhaul, Ditches CEO
BP launched a plan to repair its battered image in the United States on Tuesday, ditching its gaffe-prone chief executive and promising to slim down by trebling an asset sale target to $30 billion.
However, the company, the target of public anger over its Gulf of Mexico oil spill, tempted further ire by denying it needed cultural change and offsetting the costs of the spill, including expected fines, against its taxes.
The tax move will cost the U.S. taxpayer almost $10 billion.
BP said Tony Hayward would stand down in October, to be replaced by American Bob Dudley, as it unveiled a $17 billion quarterly loss due to the costs of the Gulf of Mexico spill.
"I believe that it is not possible for the company to move on in the United States with me remaining as the face to BP," Hayward told reporters on a conference call. "So I think that for the good of BP, and particularly for the good of BP in the United States, it is right for me to ... step down."
BP's leaking well was capped a fortnight ago after gushing up to 60,000 barrels per day into the Gulf, ruining fishing and tourism industries and polluting the shoreline with slimy goo.
BP Chairman Carl-Henric Svanberg said the company would take a hard look at itself in the aftermath of the spill: "BP... will be a different company going forward."
However, Dudley denied BP's culture contributed to the disaster and said the company would continue to target the industry's harder projects.
Some investors and analysts say BP's culture encourages greater risk-taking than rivals, contributing to more higher returns. Critics have also blamed this culture for the explosion on the Deepwater Horizon, which killed 11 workers.
"A total change in the culture of this company is necessary," Democratic Congressman Ed Markey said on CBS's "The Early Show" on Monday.
Svanberg said he had no intention of resigning and that no one on the board had suggested he should, despite some investors claiming he did too little to help defend BP against critics.
Shares in BP , which has seen some $70 billion wiped off its market value since the blast, were down last down nearly 3 percent in New York trade. Shares in London were also lower.
BP said it planned to sell assets worth up to $30 billion over the next 18 months to pay for its liabilities and create a leaner company with the potential for higher growth.
"Overall we see BP being reinvigorated by the new strategy in play, a new CEO and the worst news for the company concerning U.S ... costs now being out there," Jason Kenney, oil analyst at ING in Edinburgh, said.
Industry executives said it was a good time to sell assets as relative stability in the oil price in the past nine months makes it easier for buyers and sellers to agree deal terms.
BP agreed to a $7 billion sale of oil and gas fields to Apache last week, which valued the assets at around $19.40 per barrel of oil equivalent. The rest of BP trades at an implied $7/barrel, analysts at Morgan Stanley said.
The Final Seal
Aside from the spill, BP's business is steaming ahead with underlying quarterly profits up 77 percent on the year before, thanks to higher oil and gas prices and better refining margins.
Excluding a $32.2 billion charge for the disaster and other non-operating costs, the replacement cost profit was $4.98 billion, in line with the average forecast from a Reuters poll of 11 analysts.
Dudley said on ABC's "Good Morning America" he expected no more oil to flow into the Gulf, but added: "we've got to really kill that well to be absolutely certain." BP could begin the final procedure to kill the well late next week.
Meanwhile, Greenpeace activists forced BP to close at least 30 petrol stations in London, by activating safety alarms.
Some Gulf Coast residents, seething about the spill and BP's compensation process, said they were happy to see Hayward go.
"He will not be missed," said Larry Hooper of Empire, Louisiana, who runs an offshore fishing charter business.
Dudley, 54, would be the first non-Briton to become chief executive of BP. He was previously head of BP's Russian joint venture, TNK-BP, until he was forced to flee the country amid a spat between BP and its partners.
Hayward, who sounded downbeat and weary on a call with analysts, will receive a year's salary or 1.05 million pounds ($1.6 million) and will be appointed a non-executive director at TNK-BP as part of his departure deal. He will also keep his pension pot of around 11 million pounds.
Yet Hayward may not escape another round of testimony before the U.S. Congress. Senator Robert Menendez said he wants him to testify on whether BP influenced the release of the convicted Lockerbie bomber to aid the firm's business interests.
"Tony Hayward, regardless of his status whether he is going to be the CEO tomorrow or not, we believe that he was in the midst of the negotiations with the Libyans as it related to this oil deal," Menendez, a Democrat, said in New York.