BP Plc has named American Bob Dudley as its next CEO, saying Tony Hayward would stand down after his gaffe-prone handling of the worst oil spill in US history that triggered a $17bn quarterly loss.
Dudley, the US executive managing BP’s response to the spill in the Gulf of Mexico, will get the top job on October 1, a move that could soften US criticism of the British oil major.
“I believe that it is not possible for the company to move on in the US 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 said it planned to sell assets worth up to $30bn over the next 18 months and would cut its net debt to between $10bn and $15bn in that period.
The company said it would consider its position on future dividend payments at the time of its fourth-quarter results.
Analysts had expected BP to set aside tens of billions of dollars to cover the cost of the April 20 oil rig explosion that killed 11 people, ruined the Gulf’s fishing and tourism industries, and polluted the Gulf 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, which investors and analysts say encourages greater risk taking than some rivals, contributed to the disaster in the Gulf of Mexico.
Excluding a $32.2bn charge for the oil spill and other non-operating costs, the replacement cost profit was $4.98bn, in line with the average forecast from a poll of 11 analysts and up 77 percent on the same period of 2009.
Replacement cost profit strips out gains or losses related to changes in the value of fuel inventories and as such is comparable with net income under US accounting rules.
“It’s basically a kitchen sink job and we’ve got the way forward,” said Panmure analyst Peter Hitchens.
“They’ve taken all the charges at once and we’re seeing the first way forward – how they’re going to deal with the balance sheet – which is the key thing … I think it’s the board trying to wipe the slate clean.”
“Not be missed”
BP could begin the final procedure to kill its leaking well shortly, the top US spill response official said. That will involve pumping mud and cement through a relief well that has been drilled since May 2 to a spot close to the bottom of the damaged well.
“The next thing that we need to do is get this well in the position where we can make the intercept and kill this well from the bottom,” retired Coast Guard Admiral Thad Allen told reporters in Washington.
More than five million barrels of oil have spilled into the Gulf of Mexico since the undersea leak began, according to US government estimates. Some Gulf Coast residents, seething about damage from the spill and BP’s compensation process, said they would be happy to see Hayward go.
“He will not be missed,” said Larry Hooper of Empire, Louisiana, who runs an offshore fishing charter business.
Hayward, a 53-year-old geologist, has described Dudley as BP’s “secretary of state” for his role overseeing the cleanup.
Dudley, who was raised in Mississippi, 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 will receive one year’s salary or £1.045m and be appointed a non-executive director at TNK-BP as part of his departure deal. He will also keep his pension pot of around £11m.
BP has lost 40 percent of its market value since the spill that has hit about 39 percent of the coast stretching from Brownsville, Texas, to the Florida Keys.
Analysts said Hayward’s exit was good for the stock because he had become an easy target for angry US lawmakers and Gulf residents. Hayward was pilloried in the US for complaining he wanted his “life back” weeks after the deadly rig explosion and start of the spill.
“It is customary that when things don’t go right, you are going to chop heads and usually that starts at the top,” said Steve Goldman, a market strategist with money manager Weeden & Co in Greenwich, Connecticut.
Hayward may still not escape another round of testimony before the U.S. Congress. Senator Robert Menendez said he wants Hayward 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.
Hayward is the third of the last four BP chief executives forced into an early exit. John Browne left after lying in court papers about a gay love affair and Bob Horton was pushed out over strategic disagreements in 1992.
