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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.

By Staff writer / July 27, 2010

BP Managing Director Bob Dudley stands outside BP's headquarters in London Tuesday. On Tuesday, BP confirmed that chief executive Tony Hayward will quit and announced that it lost more than $17 billion in the second quarter because of Gulf oil spill relief efforts.

Toby Melville/Reuters


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.

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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.

IN PICTURES: Destructive Oil Spills

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.

• Progress has been made on stopping the flow of oil. A cap has prevented any more oil from spewing into the Gulf of Mexico, and BP could stop the well permanently within weeks.

• 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.