BP to sell $7 billion in assets, denies CEO leaving

BP to sell $7 billion in assets, denies CEO leaving

London: BP Plc denied a report that its embattled chief executive would leave soon, as it lined up $7 billion in asset sales to help pay for the worst oil spill in US history, lifting its shares on Wednesday.

CEO Tony Hayward, who has been heavily criticised for his handling of the disaster, had the full support of the board and would stay in office, a BP spokesman said, dismissing a report in the Times that he would step down within the next 10 weeks.

BP shares rose 2.9% to 398 pence by 0836 GMT, buoyed by its sale of assets in the United States, Canada and Egypt to US company Apache Corp(APA), a large part of a $10-billion asset disposal plan.

"Such a material sale, achieved so quickly, should ease if not banish any lingering concerns about BP’s liquidity position," JP Morgan said in a note, adding that the terms of the deal looked robust and underlined the mismatch between what BP could get for its assets and its battered stock price.

BP’s market value has fallen by around 40% since an explosion on an oil rig killed 11 people on 20 April and sent oil gushing into the Gulf of Mexico, soiling the coastline and devastating tourism and fishing industries in the region.

BP capped the well last week, choking off the flow of oil for the first time in the three months since the explosion, and on Tuesday US officials gave the company permission for another 24 hours of pressure tests on the seal.

Hayward’s ouster has been the subject of speculation after a series of PR gaffes and a failure to quickly stem the flow of oil into the Gulf.

The Times cited a person close to the matter as saying Hayward would have to step down so that BP could build its defences against a potential buyout threat by ExxonMobil or Royal Dutch Shell.

There was a growing expectation that Hayward would announce his departure in late August or September, with Robert Dudley, chief of BP’s Gulf Coast restoration efforts, seen as frontrunner to replace him, The Times said.

Al Troner, president of Asia Pacific Energy Consulting in Houston, said Hayward was not entirely responsible for the disaster, although "he seems to have an unfortunate tendency to put both his feet in his mouth."

"There is more than enough blame to spread around here, whether it’s BP, the drilling company, or the federal government reaction," he said.

BP said Apache would pay a $5 billion cash deposit on July 30 as part of the deal for exploration and production facilities in North America and Egypt. The company said the deal would include assets in New Mexico, natural gas in western Canada and concessions in Egypt.

Earlier, it announced it would sell $1.7 billion worth of assets in Vietnam and Pakistan.

Political Reverberations

The continuing disaster remains high on the American and British political agendas and dominated a visit to Washington by British Prime Minister David Cameron.

Cameron said he had asked for a review of government documents on the release last year by the Scottish government of Abdel Basset al-Megrahi, the Libyan convicted of bombing a Pan Am flight in 1988 in which 270 people, mostly Americans, died.

US lawmakers are pressing for an investigation into any possible BP role in the release. BP has confirmed it lobbied the British government in late 2007 over a prisoner transfer agreement with Libya but said it was not involved in talks on the release of al-Megrahi.

Scotland’s first minister Alex Salmond told BBC Radio 4 on Wednesday that there was no conspiracy in his country’s decision to release the bomber.

"We had no contact with BP either written or verbal or any lobbying of that kind as far as the process of compassionate release was concerned," he said.

BP has been in US politicians’ crosshairs ever since the spill, which has also has hurt President Barack Obama’s approval ratings.

About 1.6 million barrels of oil remain in the Gulf, Louisiana governor Bobby Jindal said, citing US government data.

Rig operator Ensco Plc filed a lawsuit on Tuesday challenging the Obama administration’s new deepwater oil drilling moratorium, saying it was mostly the same as the first ban that a U.S. court already put on hold.

Test to continue; Static Kill

The US government on Tuesday approved another 24-hour extension of a pressure test of the well. The broken well was capped last week — at least temporarily — after spilling up to 60,000 barrels a day of crude for three months.

The well test, which has been extended in 24-hour increments by the US government, will continue until Wednesday afternoon and then be re-evaluated.

Scientists are now weighing another option — a ‘static kill’ to help smother and plug the leak.

The top US oil spill official, retired Coast Guard Admiral Thad Allen, said BP could have a plan to proceed with the static kill option within 24 hours. This would involve pumping heavy drilling mud and possibly cement into the well, much like BP’s failed "top kill" in May.

Kent Wells, BP’s senior vice president of exploration and production, said the static kill would be different because the well is no longer spewing oil, thanks to the sealed cap.

Such containment efforts are keenly eyed by investors as BP’s ultimate costs from the spill may hinge on how much oil is determined to have been spilled into the Gulf.

Louisiana residents remain cautiously optimistic about the seal that has stopped the flow for now, but concerns remain.

"I am happy it’s stopped the flow," said New Orleans resident Barbara McGuinness. "But do I worry about this thing blowing? Yes. We don’t need any more bad news."