BP Posts $17 Billion Loss, Confirms Hayward Departure


LONDON — BP named Robert Dudley as its next chief executive Tuesday and reported a record $17 billion loss in the second quarter as the company set aside billions of dollars to deal with the aftermath of the oil spill in the Gulf of Mexico.

BP set aside $32.2 billion for costs related to the spill, including $20 billion for an escrow fund announced earlier. To help cover the costs, the company plans to sell assets worth $30 billion over the next 18 months. The sales would leave BP with a smaller exploration and production operation, it said.

Mr. Dudley, an American, is to become BP’s first non-British chief executive at the beginning of October, replacing Tony Hayward, who is stepping down after criticism of the way he handled the spill.

In a statement Tuesday, Mr. Dudley said he did “not underestimate the nature of the task ahead, but the company is financially robust, with an enviable portfolio of assets and professional teams that are among the best in the industry. I believe this combination — allied to clear, strategic direction — will put BP on the road to recovery.”

Mr. Dudley, 54, grew up in Mississippi and has been in charge of BP’s response to the spill for the past month. His appointment was widely expected among analysts and investors, who are hoping that he can help repair BP’s reputation in the United States, where it is most tarnished. BP has about one-third of its business interests and 40 percent of its shareholders and employees in the United States.

Mr. Hayward infuriated U.S. policy makers and local fishermen with the way he handled the spill, and many investors regarded his departure as necessary even if they did not blame him personally for the disaster at the Macondo well.

“The Gulf of Mexico explosion was a terrible tragedy for which — as the man in charge of BP when it happened — I will always feel a deep responsibility, regardless of where blame is ultimately found to lie,” Mr. Hayward said in a statement. “BP will be a changed company as a result of Macondo and it is right that it should embark on its next phase under new leadership.”

BP said it planned to nominate Mr. Hayward as a nonexecutive director of TNK-BP, its Russian venture.

BP has succeeded in stopping oil from spewing into the gulf, but the company is still drilling relief wells and will have to deal with the spill’s consequences for some time. Mr. Dudley’s experience in running BP’s joint venture in Russia, where he clashed in 2008 with the company’s business partners and the Russian government, is expected to help him in mending relations with Washington and residents of the Gulf Coast. BP will need political backing if it seeks to drill new wells in the gulf, as some investors hope it will.

Mr. Dudley will also have to rebuild morale among employees who had just watched their company recover from the aftermath of a deadly 2005 explosion at its Texas City, Texas, facility only to witness another tragic accident.

Mr. Dudley has been with BP since it bought Amoco in 1998, and he said he had been shocked by the damage caused by the spill when he visited the region in June.

BP’s $17 billion loss in the second quarter compares with a $4.4 billion profit in the same period last year.

“The charge is bigger than expected, but I’m not disappointed,” said Nick McGregor, investment manager at Redmayne Bentley, a stock brokerage firm in Britain. “They are trying to draw a line under this and get Bob a clean sheet to move forward, but the difficulty is that the litigation challenge persists.”

BP’s shares rose 4.6 percent Monday in London and were little changed early Tuesday. The company has lost about 35 percent of its market value since the April 20 explosion of the Deepwater Horizon rig, although shares have rebounded from the lows registered a few weeks ago.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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