BP spill a wake-up call for sector: Dudley

Written by Reuters | Updated: Jul 29 2010, 09:18am hrs
BP Plcs newly named chief executive on Tuesday called the Gulf oil spill a wake-up call for the entire industry as the company tallied up its losses and disclosed two US investigations.

Bob Dudley, who will replace gaffe-prone Tony Hayward as chief executive on October 1, said safety would be among his highest priorities as the first American to lead BP tries to refurbish the British oil companys battered reputation.

Image repair may become even tougher after BP said it would offset the cost of the spill against its taxes, costing US taxpayers almost $10 billion. BP reported a second-quarter loss of $17 billion, including $32 billion in charges related to the oil spill, the largest in US history. It also announced plans to sell $30 billion in assets over the next 18 months to help cover its liabilities. The US Securities and Exchange Commission and Department of Justice have launched informal enquiries into securities matters related to the spill, BP said.

A Senate probe into whether BP influenced the release of the Lockerbie bomber added yet another source of friction. Senator Robert Menendez postponed a hearing on the matter, set for Thursday, and accused BP and British officials of stonewalling.

More than 5 million barrels of oil have spilled into the Gulf of Mexico since the undersea leak began in late April, according to US government estimates. The spill, caused by an explosion that killed 11 people, has devastated communities and fragile ecosystems along the Gulf Coast and killed or injured countless sea creatures and coastal birds. Private lawsuits have piled up. Attorneys hoping to lead the legal fight against BP are heading to the unlikely venue of Boise, Idaho, this week as a special judicial panel considers how to handle all the cases.

BPs US-listed shares closed 1.7% lower on Tuesday. BP shares in London closed 2.6% lower. The company has lost about 40% of its market value since the explosion. Ted Parrish, co-portfolio manager of the Henssler Equity Fund in Kennesaw, Georgia, said the sheer size of BPs quarterly loss had unsettled investors. Wall Street expected a big number, but to actually read the tape and see that number, it tends to shock people, he said. Aside from the spill, BPs business is steaming ahead with underlying quarterly profits up 77% from the year before thanks to higher oil and gas prices and better refining margins.