The Wall Street Journal
As BP PLC's board approved Robert Dudley as the troubled oil giant's new chief executive, his to-do list includes overhauling a U.S. operation badly tainted by the Gulf of Mexico oil spill; mending fences with perturbed U.S. government officials; and possibly making further executive changes at the top of his own company.
BP's board met Monday and approved a plan for Mr. Dudley to succeed current Chief Executive Tony Hayward, according to a person familiar with the matter. The embattled BP chief has been lambasted for his handling of the crisis that unfolded following an April 20 explosion and fire on the Deepwater Horizon drilling rig that killed 11 people and unleashed the worst offshore oil spill in U.S. history.
BP worked Monday to reconnect a drilling ship to a relief well that is supposed to end the leaks permanently, a process U.S. officials said should begin next month. Another effort to kill the broken well, by pumping drilling mud through the top, could start by Aug. 2.
Mr. Hayward will not completely sever his ties with the company. He will be nominated for as a non-executive director of TNK-BP Ltd., BP's Russian joint venture, which he was instrumental in creating, according to a person familiar with the matter.
Investors, meanwhile, hoped Mr. Dudley's appointment would reduce the political heat on BP and help it on the path to restoring its
"An American CEO will clearly be better able to improve BP's political relationship with the U.S. government," said Will Riley, a fund manager at Guinness Atkinson Asset Management.
BP is expected to report second-quarter earnings Tuesday. Excluding spill-related costs, an average of analysts' estimates forecasts a $4.9 billion profit for the second quarter—up 60% from year-earlier levels. But analysts have issued a wide range of projections for spill-related costs, so the company's actual profit for the quarter remains hard to pin down.
Mr. Dudley had previously garnered attention as chief executive of TNK-BP, which he ran for five years from its creation in 2003 and which quickly became one of BP's most lucrative businesses.
Now, in addition to mending political fences and his company's bruised image, many are calling for a root-and-branch overhaul of BP's U.S. business, another duty that would likely fall to Mr. Dudley.
The U.S. operations account for 40% of the company's asset base but has also suffered three calamities in the space of five years—a fatal blast at a Texas refinery in 2005, an oil spill in Alaska in 2006 and now the Deepwater Horizon incident.
There is also an expectation that some executives in the company's exploration and production, or E&P, division, could see a change in status, according to a person familiar with the matter. They could include Andy Inglis, the current head of E&P, who was once widely viewed as a likely successor to Mr. Hayward, and Doug Suttles, chief operating officer of E&P and one of the public faces of BP's cleanup effort.
Both men are closely associated with BP's Gulf of Mexico strategy, and have been hurt by allegations that, in its drilling operations, the company might have cut corners on safety, something the company has denied.
In addition, the two have frequently fought with the Obama administration. Mr. Inglis, who heads the campaign to contain the spill and cap the leaking well, has had heated arguments with Energy Secretary Steven Chu in BP's Houston crisis center.
The White House stopped holding joint news conferences with BP after disagreeing with some of Mr. Suttles's comments, according to a White House official.
BP declined to comment on Messrs. Inglis or Suttles or to make them available for an interview.
"This is the battle for the survival of BP [and] Dudley has to be a little bit ruthless," said Fadel Gheit, an oil analyst at Oppenheimer & Co. "Regardless of the people who have to be fired, he must prevent any such accident from happening in the future."
Mr. Dudley is expected to call White House chief of staff Rahm Emanuel, White House energy and climate adviser Carol Browner and cabinet secretaries to assure them that he is "not abandoning the Gulf," said one person familiar with the matter.
"He will reinforce [the point] that the Gulf is more front and center" for BP now that he is taking over as CEO, the person said.
Mr. Dudley will be succeeded as head of the standalone unit BP created to deal with the long-term consequences of the spill and restore the Gulf by Lamar McKay, according to a person familiar with the situation. Mr. McKay is the chairman of BP America Inc. and has often represented BP in Congressional hearings into the Deepwater Horizon.
As well as a formal announcement on Mr. Dudley's new role, investors are also hoping BP will provide more concrete numbers for the costs of the Gulf oil spill. Together with its second-quarter results, BP is expected to give guidance Tuesday on total cleanup costs and provisions for future liabilities and fines. Analysts' estimates have ranged from $15 billion to $60 billion-plus, but so far the company itself hasn't presented a final bill.
"The range is enormous, and if they can do anything to narrow it, that would be extremely useful," said Stephen Thornber, global equity fund manager at Threadneedle Investments in London. "We need to get some figures that we can work with."
BP's board met Monday and approved a plan for Mr. Dudley to succeed current Chief Executive Tony Hayward, according to a person familiar with the matter. The embattled BP chief has been lambasted for his handling of the crisis that unfolded following an April 20 explosion and fire on the Deepwater Horizon drilling rig that killed 11 people and unleashed the worst offshore oil spill in U.S. history.
BP worked Monday to reconnect a drilling ship to a relief well that is supposed to end the leaks permanently, a process U.S. officials said should begin next month. Another effort to kill the broken well, by pumping drilling mud through the top, could start by Aug. 2.
Mr. Hayward will not completely sever his ties with the company. He will be nominated for as a non-executive director of TNK-BP Ltd., BP's Russian joint venture, which he was instrumental in creating, according to a person familiar with the matter.
Investors, meanwhile, hoped Mr. Dudley's appointment would reduce the political heat on BP and help it on the path to restoring its
"An American CEO will clearly be better able to improve BP's political relationship with the U.S. government," said Will Riley, a fund manager at Guinness Atkinson Asset Management.
BP is expected to report second-quarter earnings Tuesday. Excluding spill-related costs, an average of analysts' estimates forecasts a $4.9 billion profit for the second quarter—up 60% from year-earlier levels. But analysts have issued a wide range of projections for spill-related costs, so the company's actual profit for the quarter remains hard to pin down.
Mr. Dudley had previously garnered attention as chief executive of TNK-BP, which he ran for five years from its creation in 2003 and which quickly became one of BP's most lucrative businesses.
Now, in addition to mending political fences and his company's bruised image, many are calling for a root-and-branch overhaul of BP's U.S. business, another duty that would likely fall to Mr. Dudley.
The U.S. operations account for 40% of the company's asset base but has also suffered three calamities in the space of five years—a fatal blast at a Texas refinery in 2005, an oil spill in Alaska in 2006 and now the Deepwater Horizon incident.
There is also an expectation that some executives in the company's exploration and production, or E&P, division, could see a change in status, according to a person familiar with the matter. They could include Andy Inglis, the current head of E&P, who was once widely viewed as a likely successor to Mr. Hayward, and Doug Suttles, chief operating officer of E&P and one of the public faces of BP's cleanup effort.
Both men are closely associated with BP's Gulf of Mexico strategy, and have been hurt by allegations that, in its drilling operations, the company might have cut corners on safety, something the company has denied.
In addition, the two have frequently fought with the Obama administration. Mr. Inglis, who heads the campaign to contain the spill and cap the leaking well, has had heated arguments with Energy Secretary Steven Chu in BP's Houston crisis center.
The White House stopped holding joint news conferences with BP after disagreeing with some of Mr. Suttles's comments, according to a White House official.
BP declined to comment on Messrs. Inglis or Suttles or to make them available for an interview.
"This is the battle for the survival of BP [and] Dudley has to be a little bit ruthless," said Fadel Gheit, an oil analyst at Oppenheimer & Co. "Regardless of the people who have to be fired, he must prevent any such accident from happening in the future."
Mr. Dudley is expected to call White House chief of staff Rahm Emanuel, White House energy and climate adviser Carol Browner and cabinet secretaries to assure them that he is "not abandoning the Gulf," said one person familiar with the matter.
"He will reinforce [the point] that the Gulf is more front and center" for BP now that he is taking over as CEO, the person said.
Mr. Dudley will be succeeded as head of the standalone unit BP created to deal with the long-term consequences of the spill and restore the Gulf by Lamar McKay, according to a person familiar with the situation. Mr. McKay is the chairman of BP America Inc. and has often represented BP in Congressional hearings into the Deepwater Horizon.
As well as a formal announcement on Mr. Dudley's new role, investors are also hoping BP will provide more concrete numbers for the costs of the Gulf oil spill. Together with its second-quarter results, BP is expected to give guidance Tuesday on total cleanup costs and provisions for future liabilities and fines. Analysts' estimates have ranged from $15 billion to $60 billion-plus, but so far the company itself hasn't presented a final bill.
"The range is enormous, and if they can do anything to narrow it, that would be extremely useful," said Stephen Thornber, global equity fund manager at Threadneedle Investments in London. "We need to get some figures that we can work with."
