After Hayward, What's Next For BP?
RENEE MONTAGNE, host:
This is MORNING EDITION from NPR News. Good morning, I'm Renee Montagne.
DON GONYEA, host:
And I'm Don Gonyea.
BP has still not permanently sealed its damaged well in the Gulf of Mexico, but it has shaken up its leadership as it looks to the future. As expected, the company announced today that chief executive Tony Hayward will step down. That will take effect October 1st.
Here's BP's Chairman Carl-Henric Svanberg talking to the BBC.
Mr. CARL-HENRIC SVANBERG (Chairman, BP Global): This was a mutual decision by the board and Tony Hayward. And we all came to the conclusion that in order to rebuild the reputation, in order to rebuild the leadership position, we needed fresh leadership and that's what we're announcing today.
GONYEA: Hayward will be replaced by Robert Dudley, who will become the first American to lead the British-based company.
For some analysis, we turn to Holly Pattenden. She follows the oil and gas industry for the risk consulting firm Business Monitor International, and joined us from London. Welcome to the program.
Ms. HOLLY PATTENDEN (Head Analyst, Business Monitor International): Thank you.
GONYEA: So what impact will Tony Hayward's departure as CEO have on BP itself?
Ms. PATTENDEN: Well, it already has a quite positive impact on the shares. The shares were up 5 percent on Monday, on rumors that it's going to happen. It's important that Tony Hayward does leave and that we can have a fresh start for BP. And I think in general it's a just a positive development.
There will be a lot of discussion over his severance package. But apart from that, it's good news all round.
GONYEA: Why October 1st? Why not immediately?
Ms. PATTENDEN: Interesting question. I think they want Tony Hayward to take the rap for this awful set of financial results that are coming out. And I think they need to make sure that the whole disaster is finished and that the well is plugged and absolutely completed before he leaves, because otherwise it looks as though he's leaving while the work is left undone. So I think they need a clean break and they've chosen October as the date.
GONYEA: So what can you tell us about his replacement, Bob Dudley? Seems significant that label, American, is attached to his name. But beyond that, who is he? What's his reputation?
Ms. PATTENDEN: Well, he was born in New York and raised in Mississippi, so he's got a lot of experience of the Gulf Coast area and that's really going to stand in his favor. As well, of course, his being American and therefore being able to deal politically with that fall from BP's reputation in the U.S.
As the "Financial Times" said he's really breaking the mold in terms of BP chief executives. He was an Amoco man, so joined BP in '98 when BP acquired Amoco. And he's got a reputation for being unflappable, relaxed, fairly softly spoken. He's very popular with BP's staff, though slight concerns that he might not be ruthless enough to carry through the kind of change that's required.
But in general, I think it's a very good decision to bring him in. And I think his diplomacy and tact will work in BP's favor.
GONYEA: And quite aside from all the work that's obviously going on in the Gulf, I understand he's already been working on restoring the image of the company.
Ms. PATTENDEN: Yes, he has. His official title at the moment is managing director for the Americas and Asia, but that's quite a broad rim. And his role certainly been more that of being like a secretary of state. So, you know, really trying to help build up BP's reputation and leverage his diplomatic skills to BP's advantage.
GONYEA: And you mentioned BP's stock value was improving again. What's that based on?
Ms. PATTENDEN: It's based on the fact that they have successfully capped the well, therefore they've stopped the flow of further oil and gas into the Gulf. Also, the relief wells that are coming, which again to provides the final solution in terms of cementing a plugging the well, they're nearing that target and should be sorted out in early August.
The market capitalization of BP has plunged 40 percent since the disaster. They've now made proper provision for what costs they're expecting from the cleanup costs and compensation. And the situation is just much clearer now. I think there's quite a lot of room for the share prices to appreciate more in coming days and weeks.
GONYEA: What are the major challenges still ahead for this company? I mean the worst may be over in terms of oil gushing into the Gulf, but there's a lot of hard road ahead.
Ms. PATTENDEN: There certainly is. Yeah, there's a cultural problem within BP that safety hasn't been taken seriously enough over quite a number of years, and that cost-cutting has been the order of the day, certainly under the previous chief executive. That culture needs to change and that's what Bob Dudley's task is going to be when he joins BP as chief executive in October.
So there's a hard road ahead, absolutely. But I think BP is well-positioned because of its asset base and its managerial skills across the company, to weather this storm and to come out better and stronger.
GONYEA: Holly Pattenden analyzes the oil and industry for the risk analysis firm Business Monitor International. She spoke to us from London. Thanks for being here.
Ms. PATTENDEN: Thank you.
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