BP plc CEO Tony Hayward told employees Tuesday in an e-mail that the London energy giant has enough funds to cope with the costs related to the devastating oil spill in the Gulf of Mexico (GOM).
“I know that many of you have questions about how this incident will impact BP, your jobs, pensions, and our future plans,” Hayward wrote. But he said, “The strength of the BP balance sheet allows us to take on this responsibility.”
The e-mail is part of BP’s regular updates on the progress being made since the incident in the GOM last month.
On Tuesday BP said it had spent about $625 million on clean-up costs related to the oil spill. BP also faces litigation for damages related to the incident.
“We have demonstrated robust cash flow generation over the past few quarters and at the end of 1Q2010 our gearing ratio was below our 20% to 30% target range, at 19% or some $25 billion,” Hayward wrote.
BP reported that it more than doubled adjusted profits in 1Q2010 from the year-ago period, but the news was overshadowed by the GOM spill (see Daily GPI, April 28).
“Our financial strength will also allow us to come through the other side of this crisis, both financially secure and stronger as a result of what we have learned from this tragic incident and how we have responded,” the CEO said.
Despite the offshore disaster, Hayward told staff that a safer working environment was in place. Since launching a comprehensive safety overhaul in 2007, “Our recordable injury frequency has reduced by 29%, and the number of high potential incidents has decreased by 35% — with a reduction of close to 40% for process safety related high potential incidents.”
The CEO of Anadarko Petroleum Corp., which owns a 25% stake in the Macondo well, also said this week the company also has balance sheet that will carry the company beyond the spill’s costs.
In an interview with Bloomberg, CEO Jim Hackett pointed to Anadarko’s “tremendous liquidity,” which included more than $3 billion in cash at the end of 1Q2010 and an undrawn credit facility of more than $1 billion (see Daily GPI, May 5).
Anadarko has around $177.5 million in insurance coverage on the Macondo well and deductibles of about $15 million.
“I think all of those really make people feel comfortable that there’s the financial wherewithal to handle this issue,” Hackett told Bloomberg. But he said he didn’t know how much his company would end up paying.
“If there are extenuating circumstances where we don’t feel we are liable, we will certainly pursue what remedies we have to keep our shareholders and employees from suffering any more than we have to,” Hackett said.
Hackett serves on the board of directors for Halliburton, which provided cementing work on the Macondo well. He plans to recuse himself from any talks related to the spill, but he said he would not resign from the board.
“It’s not appropriate to resign from a board when they have a problem,” Hackett told Bloomberg. “It may look good to the general public. I don’t think it’s manly to do that.”
Anadarko and the industry will learn from the GOM tragedy, he said. “I think this incident, as unfortunate and tragic as it is, perhaps will make us even better over time.”
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