BP replaces CEO Hayward, reports $17 billion loss

LONDON — American Robert Dudley will become BP PLC’s first ever non-British chief executive, the company said Tuesday as it reported a record quarterly loss and set aside $32.2 billion to cover costs of the devastating Gulf of Mexico oil spill.

Ending weeks of speculation, BP confirmed that gaffe-prone Tony Hayward will step down Oct. 1 as the London-based company seeks to reassure both the public and investors that it is learning lessons from the spill.

“BP will change as a result of this accident,” BP Chairman Carl-Henric Svanberg told investors during a webcast presentation on the company’s second quarter results, which revealed a record $17 billion loss.

“We are taking a hard look at ourselves, what we do and how we do it. What we learn will have implications for our ways of working, our strategy and our governance.”

Dudley, a native of Mississippi, told reporters Tuesday that he recognizes the complexity of what BP has to do to restore its financial strength and its reputation.

The oil spill, he said, has been a “wake-up call not only for BP, but the oil and gas industry overall, and we will be looking deeply at our review of operational safety and what we have learned from this spill.”

Svanberg said the company’s priority was to stop the Gulf leak permanently and then to clean up miles of spoiled waters and beaches and compensate people whose livelihoods have been lost because of the accident.

But he added that the company was determined to restore value to shareholders, after a 35 percent, or $60 billion, drop in market value to around $116 billion since the April 20 explosion of the Macondo well on the Deepwater Horizon platform. Under U.S. political pressure, the company also axed dividends to shareholders this year.

The stock started out marginally higher on Tuesday, but dropped 3 percent to 404.2 pence in afternoon trade on the London Stock Exchange.

“They have seen enormous loss of capital and of the dividend and the board is committed to creating value to shareholders and believes that we can deliver a stronger BP for them over time,” Svanberg said.

BP kicked off the revamp by announcing the sale of $30 billion in assets to streamline the company into a smaller, higher quality business. It said assets on the block will come primarily from its $250 billion Exploration and Production portfolio and will be selected “on the basis that they are worth more to other companies than to BP.”

The sell-off will help the company achieve an aim of reducing net debt to a range between $10 billion and $15 billion within the next 18 months, compared to net debt of $23 billion at the end of June, to ensure that BP has the flexibility to meet its future financial obligations.

The company has already made a start with the $7 billion sale of gas assets in the United States, Canada and Egypt to Apache Corp.

Svanberg said the planned asset sales did not necessarily reflect a fear that spill costs could soar above the $32.2 billion set aside by the company. That charge includes the $20 billion compensation fund the company set up following pressure from President Barack Obama as well as costs to date of $2.9 billion.

Dudley said that BP had no intention of exiting the U.S., despite a likely rocky road ahead with costly fines and lawsuits expected after government investigations into the spill.

“I think we have a lot to offer in the United States to the oil and gas industry and getting this right, working in the U.S., meeting those commitments and cooperating with officials is vital to BP’s future success in America,” he said.

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The Associated Press

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