BP’s Dudley says embattled oil company likely to restart dividend payment early next year

By Jane Wardell, AP
Thursday, September 30, 2010

BP’s Dudley expects to pay dividends in early 2011

LONDON — BP’s incoming chief executive talked up the prospects for the embattled oil company on Thursday, giving investors hope that dividend payments will resume early next year.

Just hours before taking over the top job, American Bob Dudley put a positive spin on the transformation forced on the company by the devastating Gulf of Mexico oil spill.

“What you’ll have now is a slimmer, wiser, stronger BP,” Dudley told the BBC.

BP has already sold off more than $10 billion of assets and has plans to sell around $20 billion more to build up funds to cover potential legal costs and fines related to the spill.

Dudley, who is replacing gaffe-prone Tony Hayward at midnight Thursday, has also been quick to stress a shift in company culture to a greater focus on safety as part of BP’s attempts to rebuild shattered confidence in the company.

Earlier this week, he announced the creation of a new new unit to police safety practices throughout the company — and the departure of the executive responsible for deep water wells like the one that blew out in the Gulf of Mexico.

While acknowledging that the company had experienced “a bit of a perfect storm” in the United States, Dudley said the rest of its large global business was performing well and the board would meet before the end of the year to discuss restoring dividend payments sometime in the first quarter of 2011.

“What I see happening in the performance of the business is that we will get there,” he said Thursday. “We’re no sure of the level yet, we have to look at the portfolio.”

BP suspended dividend payments in June under political and public pressure as the costs mounted for the cleanup of the Gulf of Mexico oil spill.

The company has set up a $20 billion compensation fund and years of litigation are expected. The U.S. government could charge BP more than $21 billion for violating the Clean Water Act, though experts say companies usually pay only a fraction of the maximum possible penalty.

Dudley’s comments gave a bounce to the company’s shares — which have rebounded from 14-year lows set in June but are still down about 33 percent since the April 20 explosion on the Deepwater Horizon platform.

The stock closed London trading 1.6 percent higher at 427.8 pence on Thursday.

“We have an interesting opportunity to reset a major world company with dividends, selling off assets, meeting the obligations to the U.S.,” Dudley said. “We should make it a good, compelling investment for shareholders.”

The new Safety & Operation Risk unit announced this week will have the authority to intervene in all of BP’s technical activities. Expert staff embedded in BP’s operating units, including exploration projects and refineries.

Dudley, an American, was formerly in charge of BP’s North American operations. He stepped up as the company’s public face in the United States following a series of public relations blunders by the British Hayward.

Andy Inglis, BP’s chief executive for exploration and production, is the second high-profile executive to depart in the wake of the disaster. Inglis, who earlier this month was dropped from the board of BP’s Russian joint venture, will be leaving the main board and the company “by mutual agreement,” BP said this week.

The new safety body is a response to the widespread scrutiny and criticism of BP’s safety practices, although the company’s internal report earlier this month laid much of the blame on two contractors: Transocean Ltd., which operated the Deepwater Horizon rig, and Halliburton, which was in charge of cementing the well.

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