Louisiana deep oil drilling disaster

[Carsten Wiethoff]

http://www.guardian.co.uk/environment/20...p-dividend

Tony Hayward, BP's embattled chief executive, will risk incurring further wrath in the US over the Gulf oil spill tomorrow by defying calls from politicians to halt more than $10bn (£6.8bn) worth of payouts due to shareholders this year.
He will hope to appease City investors by promising in a conference call with analysts to stick with BP's dividend policy amid mounting concern about a plunging share price.
BP declined to comment on its strategy tonight but it is understood that Hayward will say he is confident the company can pay for liabilities resulting from the Deepwater Horizon rig explosion – now estimated by analysts at $20bn to $60bn – as well as rewarding investors.
The move follows demands from senators Charles Schumer and Ron Wyden in a letter to Hayward all dividends be halted until the cost of the clean-up is known.
Analysts warned that committing to the dividend risked further political opprobrium in the US, with Alex Stewart from Evolution Securities fearing it could force Hayward to make a U-turn next month. BP reports its results on 27 July, when it will announce the size of its next quarterly payout, but it is expected to spend more than $10bn in total dividends this year.
"The problem they have is that the oil is likely to be still flowing by the time they announce results," said Stewart. "It's not going to look good paying about $3bn in [quarterly] dividends to shareholders if at the same time local fishermen are having their livelihoods destroyed in the Gulf."
However, BP's dividend is of crucial importance to the City and to the pensions of millions who depend on payouts from profitable companies to boost their retirement funds. Together with rival Shell, BP accounted for 25% of the total dividends of £50bn paid in the UK market last year. Any cut in the dividend could result in investors selling BP shares, further weakening the company, which has lost nearly 30% of its value since the disaster began.
Crude oil has been leaking from a well at the bottom of the sea since 20 April and BP has been unable to stem the flow despite various attempts to halt it, including the "top kill" method of pumping mud and debris into the hole.
Hayward's handling of the crisis has been called into question, and he chose Facebook to apologise for his latest gaffe: saying he wanted his life back. His position has become more troubled since he said in an interview with the FT today that it was "entirely fair criticism" that BP was not fully prepared for the oil leak.
Analysts were today openly questioning the future of Hayward as chief executive, and whether his company could be taken over and broken up.
Bookmaker Paddy Power is now offering even odds that Hayward will be forced to leave his post by the end of this year, meaning two successive chief executives would have left earlier than originally intended. Hayward's predecessor John Browne departed following the Texas City fire which claimed 15 lives.