BP's chief executive Tony Hayward has resigned as the company reported a record loss after taking a charge for the Gulf of Mexico oil spill, the worst in US history.
As expected, Robert Dudley, the US executive managing the response operation to the spill, will succeed him. Mr Dudley will take up the role on October 1st, the London-based company said in a statement today.
BP today reported second-quarter net loss of $17.2 billion compared with a profit of $4.39 billion in the same period last year. Mr Dudley's challenge will be to overcome cleanup costs and liabilities from the environmental disaster, which analysts expect to exceed $30 billion.
BP has lost 40 per cent of its market capitalisation since the April 20th blast on a drilling rig that killed 11 workers and started the spill that has hit about 39 per cent of the coast stretching from Texas to the Florida Keys.
The company is selling assets, reducing investment and cutting the dividend to pay the bills after the spill wiped £45 billion pounds off the company's market value.
Mr Hayward said the market for resource assets is "favourable" at the present time. The company wants to sell assets that are below average in its portfolio in terms of quality and materiality, he said on a conference call today. Many of the assets also have higher decline rates than the average.
"The result of this high grading will be a somewhat smaller, more focused and higher quality portfolio," he said.
Mr Dudley (54), was born in New York and grew up in Mississippi, part of the Gulf Coast region suffering environmental and economic damage from the spill. BP on June 23rd appointed him to manage its response to the leak. Mr Hayward faced public anger in the US and criticism from lawmakers over his handling of the leak that was triggered by an April 20th explosion on the Deepwater Horizon rig, which killed 11 people.
BP could begin the final procedure to kill its leaking well late next week, the top US spill response official said. That will involve pumping mud and cement through a relief well that has been drilled since May 2nd to a spot close to the bottom of the damaged well.
"The next thing that we need to do is get this well in the position where we can make the intercept and kill this well from the bottom," retired Coast Guard Admiral Thad Allen told reporters in Washington.
More than five million barrels of oil have spilled into the Gulf of Mexico since the undersea leak began in late April, according to US government estimates, hitting the coastlines and economies of five states and killing or injuring countless sea creatures and coastal birds.
Some Gulf Coast residents, seething about damage from the spill and BP's compensation process, said they would be happy to see Mr Hayward go.
"He will not be missed," said Larry Hooper of Empire, Louisiana, who runs an offshore fishing charter business.
Mr Hayward, a 53-year-old geologist, has described Mr Dudley as BP's "secretary of state" for his role overseeing the cleanup efforts.
Investors cheered Mr Hayward's expected departure, sending BP shares up nearly 5 per cent in London and New York even though the company is expected to report large losses today.
The company yesterday dropped its previous insistence that Mr Hayward remained chief executive with the full support of the company's board and management.
He may not escape another round of testimony before the US Congress. Senator Robert Menendez said he wants Mr Hayward to testify on whether BP influenced the release of the convicted Lockerbie bomber to further the company's business interests.
Mr Hayward is the third of the last four BP chief executives forced into an early exit. John Browne left after lying in court papers about a gay love affair and Bob Horton was pushed out over strategic disagreements in 1992.
Under BP's terms of employment, Mr Hayward is entitled to one year's salary, or £1.045 million, and he could be in line for additional payouts under the company's incentive scheme, which awards shares options.
Mr Hayward would also keep his pension entitlements, which were worth £10.8 million at the end of last year.
Bloomberg/Reuters