WHEN: TODAY, THURSDAY, SEPTEMBER 30TH
WHERE: CNBC'S BUSINESS DAY PROGRAMMING
Following is the unofficial transcript of a CNBC interview with Incoming BP CEO Robert Dudley today, Thursday, September 30th. Excerpts of the interview will run during CNBC's Business Day programming and the full interview will run during CNBC's "Closing Bell with Maria Bartiromo."
All references must be sourced to CNBC.
ROBERT DUDLEY: Good morning, Maria. Thank you.
MARIA BARTIROMO: Can you give us a status check, in terms of the liabilities and the costs so far associated with the spill? Where are we in that regard?
ROBERT DUDLEY: So, Maria, we set up a $32 billion of liabilities, if you recall, back in June, when the well was still flowing and we weren't sure of the size of the accident. So I think those are reasonable set up liabilities that we've set aside. And in addition we've been spending some on the relief well. So we may add some operational-- li-- liabilities coming up in the next month.
But-- generally we're-- we're in-- I think good shape, with the size of the liabilities we've put-- aside. We're certainly gonna meet our obligation to the U.S. And I think-- our activities continue to show that.
MARIA BARTIROMO: I-- I guess analysts and-- and holders of the stock wanna know, you know, what this ultimately will cost the company and whether or not, in fact, did you have enough money there? I mean, can you really gauge the true-- end costs, when you've got the states still tallying up the-- the toll and-- and sending BP-- the bills. And-- and of course-- an overall uncertainty in terms of the liability at the end of the day?
ROBERT DUDLEY: Well, we've put aside $20 billion into that escrow fund. We're securitizing with assets. In addition we put-- put aside additional monies for-- funding out of our own cash flow. We've also-- are well into a $25 to $30 billion program.
We've received-- more than $10 billion so far and we continue to work-- on a number of ideas. And I think now, Maria, we're gonna use this as an opportunity to reset our portfolio, look again at-- dividend levels going forward and get the company back on its feet, meet our obligations in the U.S. and-- put together-- what I hope will be a more compelling case for shareholders-- to invest in the company.
MARIA BARTIROMO: Certainly-- shareholders-- would like that and wanna see that. You know, but I guess what I'm referring to, Bob, is, you know, attorneys general along the Gulf Coast-- who are impacted by the spill-- are lining up, you know, trying to collect for lost revenue as a result of the spill. And-- you've committed all that money. The-- the numbers are obviously-- huge. Plus you've got a billion dollars already going to-- to governments. Are you concerned that the long-term damage and the liability-- will exceed that $20 billion? Are you concerned that we're going to be dealing with this, in terms of cost, for several, several quar-- quarters to come?
ROBERT DUDLEY: Well, we-- we're putting aside that money now. We're drawing down on the-- Ken Feinberg has set up the claims. We're paying the claims for individuals and-- and business. I believe, in terms of-- of damages, it is a very reasonable number that we put aside for the company.
We're-- we're now engaging in the various-- hearings, the-- the marine board investigation, the presidential commission and-- the Justice Department is starting its investigation. From the reports and the investigations we've done, which I think are a fairly dispassionate-- look at the sequence of-- events that happened on the accident, we don't see-- we don't see any evidence of-- BP being grossly negligent in that accident.
And I think, if that's the case, we have partners as well that-- we've been funding all the bills. And-- and so there's-- I think there's-- a option there. And we will pursue it-- for everyone to meet their obligations. So, I believe right now there's nothing that-- makes me believe the company hasn't positioned itself with the liabilities, straightening the balance sheet, suring up our liquidity and being able to operate our businesses around the world, generating the cash for us to get back on our feet.
We'll reconsider a dividend in the first quarter-- of next year and begin making-- get-- getting-- getting back to-- to running-- a very large global-- energy company, as well as meeting our obligations in the U.S.
MARIA BARTIROMO: So-- is it fair to say that dividend should be in place-- mid-next year?
ROBERT DUDLEY: Well, of course it's for the board to decide. And-- we'll make recommendations on it. It is a dividend. It may or not be at the same level it was before. But I think that would be a sign of confidence that we're-- we're heading back in the right direction with the confidence of cash flows, for meeting obligations as well as-- returning dividends to shareholders.
Again, those decisions will be made later in the year-- alo-- by the board. But I think-- I think, Maria, from everything that I see, is-- we've made a tremendous corporate response to an accident. Hasn't been perfect. We haven't done everything exactly right. But the commitment is there.
We're continuing to work in the U.S. The liabilities aside, again, were established being we knew-- how the extent of the accident. And there hasn't been any oil flowing into the Gulf since the 15th of July.
So-- I think the Gulf Coast is getting itself back on its feet. Tourism is back up. And I think-- you know, BP has done what's required. We'll continue to do it. And as you go into the U.S. legal system, of course it's-- it's unpredictable. But-- we're gonna cooperate with every single investigation and-- take our learnings that we've learned from this accident, not only in the U.S. but around the globe-- so that these kinds of things don't ever happen again to anybody in the industry.
MARIA BARTIROMO: I-- I wanna ask you about-- the impact of-- of future drilling in a moment. But-- but let me ask you about the structure of the company at this point, Bob. I mean, obviously you've been incredibly busy-- making change, even before officially taking the CEO reins, which-- of-- of course is official this Friday.
You've already shaken up the structure of the company. Talk to us about what you're trying to achieve, separating the upstream business into three segments. You've got vice presidents-- heading up each. What-- what-- what would you like this company to look like in three years?
ROBERT DUDLEY: Well, there's-- there's probably two significant changes we've announced-- as of-- yesterday. One is strengthening safety and operational risk management and putting a talented executive, Mark Blye (PH), responsible for that. Give it-- make it-- it-- a wing within the company that has real teeth-- checks and balances of oversight into all of our operational activities, just to be sure that we can manage risks.
'Cause-- by nature, the energy industry is a risky business. We're gonna have a complete-- strong powers in that executive. And then taking an exploration and production company and dividing it up into three divisions, exploration, the big project developments, where you spend capital on new developments. And then the production itself. All three of those reporting directly to me, as will Mark Blye in the-- in the area of safety and risk management-- so that-- I can be-- remain very, very close to these businesses-- that we can drive standardization through those areas of the company with-- very, very clear and precise-- engineering specifications that will be required of all of our division to use.
It's a functional model that BP was moving in the direction of. And the who headed that division-- I've been working over the last month to design that. It's a recommendation that he would've done. And I believe this will raise the exploration and production of the business up higher into the company, given its size in-- within BP. It's the right thing to do. And I think it'll allow us to drive change-- quickly.
MARIA BARTIROMO: So, you've-- you've set up this new global safety unit. What have you learned from the accident? And how will this safety unit-- ensure that it doesn't happen again?
ROBERT DUDLEY: Well, Maria, we have no choice except to put-- incredible emphasis on this area, to rebuild trust-- in the United States, within the industry and around the globe. We've learned that-- we need to take-- a very close look at how we manage contractors, going forward. If we're gonna accept all the risks then we need to be able to make sure that we can manage our contractors.
We need to be sure that lessons from this are-- put all through our organization. It's not just the deepwater drilling. It is-- this company has had-- you know, a near-death experience. And-- we are gonna learn from it. We're gonna act very, very fast. I think the time is right now-- for there to be a change-- all across the company.
Everyone feels-- that this has been-- you know, a terrible tragedy in the United States-- for the families and-- people in the industry. But if we don't react now, make sure this right into the-- the soul of BP and-- everywhere in the globe-- that would be irresponsible of us. And people wouldn't expect anything less of us.
I think this will allow us to drive not only-- that-- that emphasis on risk management-- but as well as very efficiently work across the exploration and production business-- more rapidly and get this company back on its feet, moving.
MARIA BARTIROMO: Bob, let me-- let me ask you about your expectations of-- of-- of drilling off the coast of-- of-- the U.S. I mean, clearly the spill has had-- a big impact on the company-- and-- and the-- Gulf area is critical. In-- incredibly important for the company. So do you worry that, as a result of this spill, you will have-- less access in the future?
ROBERT DUDLEY: Well, I think what-- this is an accident that the whole industry needs to learn from. And-- and BP and four of the other large companies in the U.S. have joined together. And we'll be providing-- lessons learned from the spill-- respond equipment-- so that we can get back to work in-- in a safe way.
Going further than that-- I think there's-- there's still lessons to learn around contractor management and how this works. I would think that any energy company right now is going through what it takes to-- to be able to drill-- in the deepwaters-- checks and-- checks through their systems.
We've been drilling in the Gulf of Mexico for 20 years. And we have done safely until this incident. So I think the-- the-- the-- the operation of deepwater drilling can be done safely. But clearly we need to look at this-- from the lens of-- how to respond to the unthinkable happen. The-- very low-- low probability but very high impact-- events is something we're gonna look at all the way through our operations, not just in drilling but all of our activities.
And I think you wisely have seen the administration in the U.S. step back, make sure that they understand what has happened and make sure an industry can respond. And-- I think there's part of us rebuilding trust in the United States. We've gotta share everything we've learned. Then we've got to-- put in the systems to make sure that not only we can drill safe and-- and other companies can as well.
And I think this is-- you know, it's a time for debate of-- of the-- of the society in the U.S. And it's gonna be a country that has-- a great thirst for energy. And there are great resources in the United States. And-- if the U.S. doesn't-- develop-- an environment here where we can do this safely, you'll end up with energy flowing in on tankers, because it just-- we'll need that energy, at least for-- for a long time to come. And I very much want BP to be part of that future in the U.S.
MARIA BARTIROMO: And-- and-- and-- and-- and so-- you haven't had any expectation that-- you would not be part of that-- critical piece of business then? Any-- any-- sort of signals from-- from government?
ROBERT DUDLEY: No, we haven't. We've cooperated with our learnings on a spill response. We've met with the officials and-- and laid out in some detail what we've done, in terms of response, both sub-sea and then-- on the-- on the waters and the surface.
We shared that with industry and then we've had this accident report. I think those are the things that-- rightly so, the regulators in the U.S. would wanna know that we are-- participating. We're not stepping back. We wanna cooperate-- and share those learnings. And I think we-- as a company, have done that-- to-- to-- you know, as good as anyone, in terms of being able to provide that. And I think that's what regulators-- should ask for and insist on-- in the U.S. We-- we're also doing that around the world, sharing our learnings from this. We have had no signals that BP-- will not be operate in the U.S.
ROBERT DUDLEY: We have a very large business there. We have many employees and lots of economic activity generated. And I don't think that would be the right answer for-- for the country, as long as we meet our obligations.
MARIA BARTIROMO: Well, that's a great point that you make in terms of jobs. Let me ask you, Bob-- all of this, in the midst of this you are continuing to strengthen the balance sheet. The company is-- expected to issue the first bond since the Gulf oil spill. What kind of-- reception are you-- are-- are you getting there? And-- what-- what are your plans for that money?
ROBERT DUDLEY: Well, we have had good response. We went out-- two days ago with the bond-- very good response. Five years-- one year, five year and tens years. Very good response-- well, well oversubscribed. We were originally planning two to three billion. We went with a three and a half billion dollar bond. And we'll be doing-- a little bit more of that in the future.
Part of that is part of our active-- retirement program from other obligations that we have. Our balance sheet is-- is back strong. Our liquidities in good shape now and-- you can see the spreads on our-- our-- our bonds have come down-- substantially now. And I think there's more confidence in the market. BP can do this. And I think it came about when the oil stopped flowing and people realized this was not-- an incident-- problem-- that we and the world had to deal with. And I think there's confidence back now.
MARIA BARTIROMO: You-- it's-- it's a great point. And in terms of the BP image-- having taken a hit-- what concretely can you can to do differently to continue-- fixing that?
ROBERT DUDLEY: Well, Maria, I-- I think-- I think it's not probably talking about it. I think it's more that we just need to get on and do things and show people that we can manage risks, that we can-- are in action on it, meeting our commitments and obligations. And then slowly, slowly (over time)-- it may sound aspirational, but over time I believe that people will see-- BP as a good corporate citizen and-- and-- wants to restore its image. And-- we'll just have to do it by our actions, rather than saying anything, I think.
MARIA BARTIROMO: Bob, would you like to add anything else that I may have missed?
ROBERT DUDLEY: Maria, no. I-- I think what I would like to know is that-- even though the oil has stopped flowing now and has stopped flowing for se-- couple of months or more now-- people feel that maybe we're gonna pack up and-- leave-- the Gulf Coast. And I just want people to know that we are intending and will stay as long as it takes to-- to restore the Gulf Coast and work with government officials going forward on that. And-- not back away from-- from these commitments.
And the other thing I would add is our businesses around the world, despite the thousands of people who came and are-- some are still working on the Gulf Coast. BP's businesses around the world are continuing very well. And that should give people confidence we'll be able to meet those obligations.
MARIA BARTIROMO: Are you-- are you still expecting-- asset sales?
ROBERT DUDLEY: We are. We are. We've-- completed about $10 billion. We've targeted $25 to $30. We've got discussions underway in a variety of the assets around the world. People are-- we've received very good prices for those assets and their owners, that may be more logical than us for this.
And-- I think now we have an unusual opportunity as an international oil company to reset-- reset both the dividend, our investment levels going forward, getting some growth characteristics going forward. And that's-- despite the-- the-- the accident and the-- and the-- terrible tragedy of it, but as a company I think-- I am co-- sorta quietly-- optimistic that BP can not only meet those obligations but turn itself into a dynamic energy company still for the future.
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