OTCPK:BPAQF - Post by User
Post by
scissors14on Sep 30, 2010 2:55am
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Post# 17510478
BP
BP
BP is one more accident away from oblivion. Bob Dudley has been at the company long enough to appreciate that fact. His two predecessors as chief executive were felled, directly or indirectly, by an entrenched corporate fecklessness about safety. Tony Hayward is going because of the Deepwater Horizon disaster in the Gulf of Mexico. John Browne’s ouster was partly in expiation for the Texas City refinery fire in 2005 and the 2006 Prudhoe Bay pipeline leaks.
Each BP accident brought a renewed pledge on safety, all of which proved hollow. Superficially, Mr Dudley’s move on Wednesday to create a new safety division does not sound all that different to previous safety drives. But his promise that the division would have the authority “to intervene in all aspects of BP’s technical activities” hints at substantive change. That needs to happen; BP has no room for error.
BP’s upstream division will also be divided into three distinct units, hopefully enhancing the reporting of field activities to Mr Dudley and the board. Arguably, one of BP’s problems has been that not enough independent, critical information on what was going on operationally was reaching the top. The new structure should rectify that vacuum.
It will take years to change BP’s entrenched corporate culture, however. Meanwhile Mr Dudley faces another pressing challenge: rebuilding the investment case for BP. Spending on safety will cut into profits; the shares are still 36 per cent below their pre-leak level. Restoring the dividend might start to rectify that, but something more drastic – such as asset sales beyond those already announced – may be needed to win back the trust of investors. He has a career’s worth of work to do in a hurry. If another accident doesn’t do for him, Mr Dudley might be undone by less-than patient investors.