BP loses $17 billion, but is worst over as Robert Dudley takes reins?
BP earmarked $32.2 billion last quarter for current and future Gulf oil spill costs – leading to $17 billion in losses. Yet BP is cautiously optimistic with Robert Dudley set to take over in October.
The oil giant BP reported a $17 billion loss for the year's second quarter – a gargantuan hit to the firm that reflects key costs of the Gulf oil spill.Skip to next paragraph
In Pictures Destructive Oil Spills
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But the loss comes at a moment when BP is poised to put some of the biggest challenges of the Gulf oil spill crisis behind it.
Among the changes of recent weeks:
• Along with the quarterly results, BP announced a change in top leadership. Tony Hayward, who enraged many Americans with a demeanor that appeared insensitive to the distress of Gulf residents, will be replaced by BP Managing Director Robert Dudley. Mr. Dudley will become the London-based corporation's first American chief executive.
• The company has set aside $20 billion to pay economic damages to Gulf-area communities and businesses, and a new independent administrator, Kenneth Feinberg, is working to get the money moving faster to spill victims.
The $20 billion fund, plus other spill-related costs, was the reason why the second-quarter loss looks so bad. BP says it took a $32.2 billion charge in the quarter "to reflect the impact of the Gulf of Mexico oil spill, including costs to date of $2.9 billion for the response and a charge of $29.3 billion for future costs, including the funding of the $20 billion escrow fund."
The move, coupled with the leadership change and the wellhead cap, raises hopes that the worst of this corporate crisis may now be behind the firm.
Stock analysts, however, are reluctant to jump quickly to that conclusion. Many potential liabilities remain unsettled.