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Thursday, June 03, 2010

Gulf oil spill: BP to go ahead with $10bn shareholder payout

Source: Guardian (UK)

Tony Hayward, BP's embattled chief executive, will risk incurring further wrath in the US over the Gulf oil spill tomorrow by defying calls from politicians to halt more than $10bn (£6.8bn) worth of payouts due to shareholders this year.
He will hope to appease City investors by promising in a conference call with analysts to stick with BP's dividend policy amid mounting concern about a plunging share price.

BP declined to comment on its strategy tonight but it is understood that Hayward will say he is confident the company can pay for liabilities resulting from the Deepwater Horizon rig explosion – now estimated by analysts at $20bn to $60bn – as well as rewarding investors.
The move follows demands from senators Charles Schumer and Ron Wyden in a letter to Hayward all dividends be halted until the cost of the clean-up is known.

Analysts warned that committing to the dividend risked further political opprobrium in the US, with Alex Stewart from Evolution Securities fearing it could force Hayward to make a U-turn next month. BP reports its results on 27 July, when it will announce the size of its next quarterly payout, but it is expected to spend more than $10bn in total dividends this year.

"The problem they have is that the oil is likely to be still flowing by the time they announce results," said Stewart. "It's not going to look good paying about $3bn in dividends to shareholders if at the same time local fishermen are having their livelihoods destroyed in the Gulf." Link Here


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