BP Board Backs Plan to Replace Hayward with Dudley
BP Plc’s board approved a plan to name Robert Dudley as chief executive officer, replacing Tony Hayward as the company looks to rebuild after battling the biggest oil spill in U.S. history, two people familiar with the situation said.
Dudley, the director of BP’s oil-spill response unit, will take the helm on Oct. 1, one of the people said, declining to be named before an official announcement today. The decision was reached in discussions with board members about how best to take BP forward and rebuild its U.S. position, the person said.
Hayward, 53, has faced public anger in the U.S. and criticism from lawmakers over his handling of the Gulf of Mexico spill, which was triggered by an April 20 explosion on the Deepwater Horizon rig, killing 11 people. Dudley, 54, was born in New York and grew up in Mississippi, part of the Gulf Coast region suffering environmental and economic damage. BP on June 23 appointed him to manage its response to the leak.
“He’s been in charge of the Gulf cleanup, and it seems that he’s been taken reasonably well,” said Colin Morton, who helps manage about $1.4 billion at Rensburg Fund Management Ltd. in Leeds, England, and holds about 6.5 million BP shares. “Part of this is to appoint somebody whose reputation has not been soiled by the whole thing.”
“The fact he is American should help to keep things a little more straightforward in his dealings with the U.S. administration,” said Ted Harper, who helps manage $6.8 billion at Frost Investment Advisors in Houston and doesn’t hold BP stock. “Dudley’s most important task will continue to be making sure that the well is capped.”
BP said yesterday that no announcement would be made on management changes before this morning, when the company reports its second-quarter earnings. BP rose 4.6 percent to 416.95 pence in London trading yesterday.
Hayward may be entitled to receive his pension fund, worth 10.84 million pounds ($16.8 million) at the end of last year, as well as a year’s salary of about 1 million pounds. He may be offered a non-executive role on the board of BP’s Russian joint venture, TNK-BP, Sky News reported yesterday.
The company has seen its market value fall by about 45 billion pounds as it battled to stop the spill. The well has now been sealed, and BP plans to permanently plug it with cement next month.
Dudley has spent about 30 years in the oil industry, including a stint as CEO of TNK-BP starting in 2003. That job ended after disputes with Russian partners led to Dudley fleeing Russia in 2008, citing “sustained harassment” amid court battles, and labor and tax inspections.
‘Very Big Ocean’
While seeking to contain public outrage about the spill’s environmental damage, Hayward made several gaffes, including saying he wanted his “life back” and calling the spill “relatively tiny” in a “very big ocean.” The well spewed 35,000 to 60,000 barrels of oil a day from one mile beneath the surface, according to a U.S. estimate.
The company’s success in capping the well after three months will limit its final liability for the spill to $33 billion, according to the median forecast of analysts surveyed by Bloomberg. Worst-case forecasts for the crisis had pegged the bill as high as $100 billion.
The cap halted the oil flow a week before Tropical Storm Bonnie blew through and forced a temporary halt to drilling of a relief well that will seal the leak for good.