Dudley a disappointment to BP shareholders as share prices drop due to lower than expected profits. BP wants to read Obama's emails. Drilling regulators and oil companies too close...hell, some are even related! Lawyers for spill victims want judge to take over for Feinberg.
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BP CEO Bob Dudley isn't making fans out of shareholders. Could the CEO position be a constantly revolving door? With less than stellar profits for the second quarter, some are calling for change.
A year ago on Wednesday, BP’s fateful Gulf of Mexico well was still not completely sealed and the company announced it had lost $17bn after tax in the second quarter, one of the largest losses in British corporate history. It also confirmed the departure of Tony Hayward, its chief executive, and announced the appointment of Bob Dudley.
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BP reported a replacement cost profit, a measure that strips out the value of inventory, of $5.3bn for the second quarter of 2011...
However, the news was not good enough for some and investors reacted badly, sending BP’s shares down 2.5 per cent in London.
Some investors pointed to BP's failure to secure an Arctic exploration deal with Rosneft as a lack of leadership on Dudley's part. Others felt that BP should sell off mature assets, such as those in Alaska. (It would be nice to get them out of the US entirely!)
Other analysts pointed to the success other companies have had in dividing into two parts, refining and marketing, and exploration and production. BP's alliance with TNK-BP
has caused headaches for management, but Dudley was adamant that they would not pull out.
Unless he opts for something radical – and the indications are that this is unlikely, at least in the short-term – the immediate dilemma for Mr Dudley is how to balance the impatience of investors with his resolve to deliver “deep-rooted, thorough and reliable change”. BP cannot afford to have another accident.
“BP has a reasonable strategy,” says Alastair Syme from Citigroup, “playing to what they believe are their strengths in exploration, but the problem for shareholders is there is no short-term gratification”.
However, some investors remain unconvinced and if he does not bring them with him, Mr Dudley may find that time could start to run short.
“BP still has three monster numbers that could come at them at any time,” says one UK-based investor. “The investigation by the Department of Justice; Russia; and its massive capex budget where anything can go wrong. A company the size of BP is very difficult to run.”
But don't cry for Dudley yet:BP just bought a 1.7 billion dollar stake in Reliance Industries of India. This gives them a 30 percent interest in 21 out of 23 oil and natural gas blocks. (And then Dudley's god said..go forth and pollute all the earth.)
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BP lawyers petitioned in federal court trying to get access to Obama's emails from the period of last summer's spill.While BP may be short on profits, they have no lack of nerve.
A lawyer for the oil giant had argued that emails by Carol Browner, Obama's former adviser on energy and climate matters, and three other officials in the Executive Office of the President could shed light on the White House's role in estimating the rate of oil gushing into the Gulf of Mexico from the company's blown-out well.
Carol Browner was the one who when being interviewed on the Today Show
misrepresented a government analysis and said (in August 2010) that the oil was 3/4 gone! BP contends that the actual government figures on the spill amount are off by 50 percent...not in BP's favor. If BP pays fines under the Clean Water Act based on BP's estimate it could decrease the amount of fine paid by $2.7 billion. (Well, you gotta keep those shareholders happy.)
The Justice Department said BP's request was overly broad. BP's proposed search of White House emails would collect nearly everything that mentions BP or the blown-out well that triggered a deadly explosion on the Deepwater Horizon drilling rig, a government attorney argued.
"After months of cooperation and accommodation, the United States cannot entertain this request: it is a bridge too far," the Justice Department wrote in its own letter to the judge.
US magistrate Sally Shushan (the one who took Hayward's embarrassing deposition video's off the web) denied BP's request. |
We knew that under the old Interior Department, drilling regulators were too close to the oil companies they regulated and inspections may not have been exactly rigorous. That was why Obama established the new Bureau of Ocean Energy Management Regulation and Enforcement, right? Recent data suggests that it takes more than changing the rules to change a culture. Because the culture and economy is so tied tto the oil and natural gas interests in the area, it is hard for the BOEMRE to find qualified inspectors who haven't worked for or who don't have friends and family working for these companies.
Documents obtained by The Associated Press show that about 1 of every 5 employees of 109 involved in inspections in the Gulf has been recused from some duties because of the risk of coming into contact with a family member or friend working for a company the inspector regulates.
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In the Lafayette, La., office of the Bureau of Ocean Energy Management, Enforcement and Regulation nearly 35 percent of inspectors have been disqualified because a friend or relative works for a company they could interact with on the job. In Lake Charles, La., nearly 30 percent of inspectors held their last job with an oil and gas company, meaning they can’t perform any duties involving their former employer for two years.
The numbers come from recusal forms under a new ethics policy instituted last year by the Obama administration to identify and prevent possible conflicts of interest before they arise.
Copies of the forms submitted by more than 100 inspectors, engineers and permit reviewers in five Gulf coast offices were obtained by the AP under the Freedom of Information Act. Personal information, such as the names of the employees, their friends and their family members, was blacked out to protect privacy. But the companies with ties to government workers were disclosed, and they represent a who’s who of the offshore oil and gas industry, from majors like Chevron, Shell and BP to smaller companies such as W&T Offshore Inc., Ankor Energy LLC and Hilcorp Energy
Unfortunately, it is the experience gained from working for these companies that makes them qualified for the job. The truth is in the past these relationships were not documented and dealt with, there was no call for an inspector to recuse himself from an assignment.
While inappropriate behavior has been limited to a few individuals so far, as both Interior Secretary Ken Salazar and Bureau of Ocean Energy Management, Enforcement and Regulation Director Michael Bromwich have stressed, the forms quantify for the first time the extent of the bonds between the industry and the agency formerly known as the Minerals Management Service.
“The conflicts of interest addressed by this policy are not crimes or badges of shame,” Bromwich said in a statement provided to the AP. “The fact is that they exist because of the close-knit communities in which much offshore activity takes place; they cannot be wished away. The issue is not the conflicts themselves, which have existed for decades, but whether they are identified, addressed and managed.”
The large number of conflicts shown in these recusal forms have some legislators calling for further regulation to be placed on the companies.
“The bad news is the oil industry still has motive and opportunity to try to control regulators,” said Sara Gonzalez-Rothi, the legislative counsel for Sen. Bill Nelson, D-Fla. “But the good news is we wouldn’t even be seeing some of these potential conflicts and recusals were it not for the reforms we pushed through in the past few years.”
Nelson sponsored a bill that would have barred inspectors from working for the industry for two years after leaving the agency and required them to divest themselves of energy company stocks. Similar provisions are now part of a larger offshore drilling safety bill that is stalled in the Senate.
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