It’s hard to tell that just a year ago BP was reeling from financial havoc and an American public out for blood.
The oil giant at the center of one of the world’s biggest environmental crises is making strong profits again, its stock has largely rebounded, and it is paying dividends to shareholders once more. It is also pursuing new ventures from the Arctic to India. It is even angling to explore again in the deep waters of the Gulf of Mexico, where it holds more leases than any competitor.
“BP has a critical role to play in meeting the world’s ever-growing need for energy,” BP Chairman Carl-Henric Svanberg said at the company’s annual meeting in London last week.
While some of this angers Gulf Coast residents, it is a testament to some deft handling of the crisis by the company, which after some major gaffes early on conducted a housecleaning in its executive ranks, adopted a careful communications strategy and assigned an outsider to handle victims’ compensation claims.
The company’s decision to open its checkbook and pump hundreds of millions of dollars into Gulf communities, help out-of-work rig hands and support Gulf research also contributed to the turnaround.
Yet BP is not out of the woods yet.
BP employees could be found criminally negligent for the 206 million gallons of oil the U.S. government says gushed from the company’s blown-out well and for the 11 men who died when the Deepwater Horizon rig it was leasing exploded. Hundreds of lawsuits and civil and criminal fines could add billions of dollars to its already staggering liabilities. And the findings of several investigations still under way could further damage its reputation.
BP has estimated that the spill will cost the company at least $40.9 billion but is hoping to force some of its partners on the doomed rig to assume some of those costs.
There is also lasting damage in the Gulf, including empty hotels, out-of-work oystermen and fears of a badly disrupted underwater ecosystem. And some of those worst hit by the spill scoff at BP’s oft-repeated promises to make people whole again.
“I don’t know of one person who has come to me and said, ‘I’ve been made whole. I feel good.’ Everything is completely negative from everybody,” said Louisiana fishing guide Ron Price.
When BP finally managed to cap its runaway well in July and permanently sealed it in September, the bankruptcy talk was reduced to a whisper and the 24-hour-a-day beating the company was taking on television and newspaper front pages eased up.
By the fall, there was talk that the crisis wasn’t as bad as feared and that the Gulf might recover sooner than expected. Then soaring oil prices came to the company’s rescue, boosting its bottom line. Now, as Wednesday’s anniversary approaches, the oil spill that so riveted the nation’s attention is beginning to fade into memory.
For the families of the men killed on the rig, BP’s resilience can be downright painful.
“BP has never done anything other than send flowers and three people to Jason’s memorial service,” said Shelley Anderson, the widow of rig worker Jason Anderson.
BP officials point out that they set aside $20 billion for a fund that is still processing claims for victims of the disaster, though only $3.8 billion of it has actually been paid to date. They also still employ cleanup and recovery workers, though far fewer than before.
Company officials also say they are living up to their commitments to restore the region’s economy and environment.
“BP has not – and will not – shy away from its responsibilities,” CEO Bob Dudley told shareholders at the company’s annual meeting, which was marked by scuffles between protesters and security guards, and investor dissent over the performance of several directors.
Dudley took over Oct. 1 as CEO after the ouster of Tony Hayward, who infuriated Gulf residents by saying during the crisis, “I’d like my life back.” Dudley, who grew up in Mississippi and was the first American ever to lead the British company, quickly sought to move BP beyond the crisis, firing the executive responsible for deep-water wells and announcing a new unit to police safety throughout the company.
BP also signed energy-exploration agreements in Indonesia, China, India and Australia. It agreed to pay $680 million for a controlling interest in Brazilian ethanol and sugar producer CNAA. BP also agreed to pay India’s Reliance Industries $7.2 billion for a stake in key oil and gas blocks, and announced a deal with Russia’s state-owned oil firm Rosneft that would involve exploration in the Arctic Sea, where a big oil spill could damage a pristine ecosystem far less resilient than the Gulf of Mexico. The deal is facing opposition and is not yet final.
BP isn’t shying away from the Gulf, either, though it is moving more methodically there amid the political currents.
The first deep-water permit issued after the Obama administration lifted a post-spill drilling ban went to Noble Energy Inc. for work on a well off the coast of Louisiana. BP is not the operator but it has a 46 percent stake in the well. BP also bought out Shell’s 25 percent interest in two Gulf fields in December, making BP the sole owner of both.
Spokesman Scott Dean said BP, the leading leaseholder in the Gulf, will remain active in all facets of the Gulf of Mexico oil exploration. The company has applied for a permit to drill one new well in the Gulf and is certain to apply for more.
The Bureau of Ocean Energy Management Regulation and Enforcement said BP’s applications will be weighed just like any other company’s.
“BP is trying to refill its new-project pipeline with deals in the Arctic, offshore India, and Asia, but the Gulf of Mexico remains a key region for the company,” said industry analyst Fadel Gheit of Oppenheimer & Co. “They don’t want to push too hard, knowing politicians and environmentalists will be all over them.”
Despite the uncertainties, BP announced Feb. 1 that it would restore its dividend and that it made a fourth-quarter profit of $5.6 billion, a 30 percent increase from the same period a year earlier. Rising oil prices are certain to boost its cash on hand and could lead to even higher profits. BP’s stock fell 54 percent in the months after the spill, but it has regained much of that since then. Its stock is now trading about 20 percent lower than what it was the day before the rig exploded.
BP was able to deflect some of the criticism by shifting the paying of victims’ compensation to claims czar Ken Feinberg, who has absorbed much of the blame for what victims say is a slow payment process.
Overall, the oil giant still has a lot of work to do to improve its reputation. Five Gulf Coast residents who had planned to tell investors about their post-spill woes were denied access to the company meeting, prompting confrontations with guards. Inside, hundreds of BP investors questioned board members about what they said was excessive executive pay and a lack of transparency on safety improvements.
In Washington, lawmakers are watching BP closely.
CEO Dudley still spends a great deal of time reassuring detractors.
“We need to earn back your trust, along with that of state and federal leaders and the trust of Gulf Coast residents and customers,” he said at an industry conference in Houston last month. “We are determined we will once again restore that trust, and I realize this requires action, not words.”
Associated Press writers Dina Cappiello in Washington, Jonathan Fahey in Houston and Jason Bronis in Buras, La., contributed to this report.