Robin Pagnamenta Recommend? Tony Hayward’s mind has been on matters other than profit this week after the explosion in the Gulf of Mexico that killed 11 rig workers and triggered an oil spill.
Nevertheless, the first-quarter performance outlined yesterday by the oil group offers some comfort for BP’s chief executive. The result reflects a powerful rebound from the low point of the global recession a year ago, when crude prices slipped to lows of about $33.
Until last week’s accident, BP had been riding the recovery well, keeping debt levels restrained while pleasing investors by managing to resist pressure to trim the dividend.
However, the explosion on the Deepwater Horizon rig presents a serious challenge for the company. It is BP’s biggest operational disaster since Mr Hayward’s appointment in 2007 and much depends on how quickly he and his team can contain the environmental damage.
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Transocean, based in Switzerland, was the operator of the rig and responsible for safety but BP, which owned the licence to drill at the site, is likely to face costs for the clean-up as well as damage to its reputation in the United States. The disaster is also likely to prompt a reappraisal of safety in the offshore oil industry.
As supplies of onshore oil and gas become harder to access, Mr Hayward is staking BP’s future on its expertise in deep-water exploration. Last month the group spent $7 billion (£4.6 billion) acquiring a string of deepwater fields off the coast of Brazil and in the Caspian Sea, while President Obama has recently approved an expansion of offshore drilling in the United States. No doubt Mr Hayward will be keen to emphasise BP’s aggressive response to the clean-up effort.
Clean-up job for experts
A Texan troubleshooter that helped to tame the Kuwaiti oil well fires of 1991 has been drafted in to help to control the spill in the Gulf of Mexico that followed a deadly explosion on a BP-leased rig.
Wild Well Control, an early competitor of Red Adair, is battling the 1,000-barrel-a-day leak that has been growing since the disaster, which occurred last week.
The Houston-based company was founded in 1975 by Joe R. Bowden Sr, a renowned Texan oil well firefighter. In 1991 he helped to cap more than 130 burning wells in eight months after Iraqi forces adopted a scorched-earth policy as they retreated from Kuwait. At one stage the fires were burning an estimated six million barrels of oil per day — equivalent to 7 per cent of present global production.
As well as being a firefighting specialist, Wild Well has a marine division, tackling deep-water blowouts such as the one thought to have triggered last week’s accident.
The company has been owned since 2001 by the New York-listed Superior Energy Services.