BP plc's executive team appeared to be steeled and ready to answer an onslaught of aggrieved shareholders Thursday at the first annual general meeting since the Deepwater Horizon tragedy in the Gulf of Mexico (GOM) claimed the lives of 11 men and destroyed the company's reputation.
Undaunted by protests and criticism both inside and outside the Excel Center in London, Chairman Carl-Henric Svanberg and CEO Bob Dudley addressed questions from a standing-room-only crowd for several hours.
"BP is going through a fundamental change," Svanberg said in his opening remarks. "We have a new organization which is functionally-based rather than asset-based. This is not a simple reshuffling of the pack of cards; It is the change which any company would go through in these circumstances."
However, he acknowledged, as did Dudley, that actions speak louder than words. And there were plenty of words -- and actions -- from members of the audience. Many grilled the executive team about BP's response to the GOM tragedy and other projects under way. A group of protesters was also ejected by security after attempting to storm the stage early in the meeting.
Texas fisherwoman Diane Wilson, a BP shareholder, was one of those ejected from the building after being deemed a "threat" to other shareholders. She and a group came to London, she said, to "articulate the anger" of thousands of Gulf Coast residents.
Another shareholder, Antonia Juhasz, managed to secure a seat -- and a speaking slot. She read a letter aloud that was written by the father of one of the men who died in the Macondo well blowout. Svanberg attempted several times to cut her off, to no avail.
"BP, [services contractor] Halliburton and [rig owner] Transocean could have prevented this but it would have taken more time, more money and you were too greedy to wait," Juhasz said from the letter. "You rolled the dice with my son's life and you lost."
Dudley, who took over from beleaguered CEO Tony Hayward last fall, disagreed and responded that BP had not acted recklessly.
"Many of your statements," he said to Juhasz, "sound like they were prepared by a plaintiff's attorney." His retort was greeted with applause and shouts from the audience.
How, several shareholders asked, will BP prevent another disaster?
"Too little information is being provided on how risk is being managed by the board," said Julie Tanner, who represented stockholder Christian Brothers Investment Services. "Given the impact last year's tragedy had on stock price, we want to make sure future events are prevented."
Svanberg responded, noting that "in the business of working with hydrocarbons there will always be a risk. You, our shareholders, must be comfortable that we are taking the right risks on your behalf to safeguard your investment."
To prevent another tragedy like the one in the GOM, Dudley explained, as he has several times in the past few months, that BP now has a "comprehensive program of activity to strengthen safety and risk management..."
Faced with a barrage of aggrieved shareholder questions, Dudley and Svanberg again and again attempted to assure the audience that BP would not shoulder full financial responsibility for the GOM oil spill.
"Some may think that this accident is related to just one company," said Svanberg. "They are wrong...BP is committed to ensuring that all of the parties involved bear their share of the burden."
It already has proven to be a financial burden for BP. In the wake of the tragedy the company's share price plummeted to the $30s from $60-plus per share and today is trading at around $45. In addition to the stock and profit losses, the company is selling billions of its global assets and has set up a $20 billion trust fund to compensate those who suffered from the tragedy.
"Suspending the dividend and indeed not paying the dividend in the pipeline, was one of the hardest decisions we have taken," Svanberg told the audience. "But it was absolutely imperative to make the company financially safe and secure." The dividend payout remains under review as the revamped "strategy bears fruit."
Dudley said he is hopeful that a strategic alliance to swap shares with Russia's state-controlled OAO Rosneft will be completed. The transaction, estimated to be worth billions, was announced early this year, but it has faced considerable legal roadblocks from TNK-BP, also based in Russia, which claims exclusive rights to partner with BP (see Daily GPI, April 11; Jan. 18).
Rosneft and BP were to have completed their alliance agreement on Thursday, but Rosneft agreed to extend the deadline to May 16.
BP has tried to win over its TNK-BP partners, Dudley said.
"We have offered cash, we have offered participation to TNK-BP in international ventures and we have even jointly offered, with Rosneft, a fair offer for their company," he said.
However, offering a significant piece of BP is not an option, he noted.
"We have to be realistic," Svanberg said of the Rosneft proposal. "Exactly how it will unfold I don't want to speculate. I can assure you we will do what we can to land it in a good way."
Beyond the Rosneft proposal, BP won't flinch from continuing to invest in strategic projects; 32 upstream projects are scheduled to ramp up by the end of 2016, which together are expected to contribute around 1 million boe/d to total production.
"We're investing in exploration, particularly in deepwater," Dudley told the audience. "Exploration is one of our distinctive strengths and the means by which we turn prospects into value. So we are doubling our investment in exploration over the next few years. We will continue to explore in well-established locations such as Angola, Egypt, Azerbaijan and, indeed, the Gulf of Mexico. But we also expect to test new provinces in Jordan, Brazil, the South China Sea and Australia."
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