BP Delays a Decision About Canceling Its Dividend
BP has been pressured to cancel its dividend in order to conserve money needed to clean up the oil spill and pay restitution and damages to all those throughout the Gulf region affected by the devastation -- now the worst environmental disaster in U.S. history. The company is resisting such a move because its shares have lost 40% of their value since the disaster occurred on April 20, and canceling the dividend would be an even bigger blow to already angry investors.
"Future decisions on the quarterly dividend will be made by the board, as they always have been, on the basis of the circumstances at the time," BP said in a statement. "All factors will be considered and the decision taken in the long-term interests of the shareholders."
BP Will "Pay All Legitimate Claims"
During a morning conference call for investors, BP CEO Tony Hayward (pictured) emphasized that the company was financially strong, stating that it's "performing well," and "our asset base and balance sheet remain among the very best." He also reiterated that BP would stand by its obligations to clean up the oil and "pay all legitimate claims" associated with the spill. Hayward said the company has spent more than $1 billion on the disaster so far and would continue to spend at that rate as long as was needed. However, he wouldn't estimate what the financial toll would be.
While Hayward said BP would likely be able to pay the substantial majority of the remaining containment, removal and clean-up costs buy year-end, he was reluctant to place a dollar estimate on the total costs largely due to the uncertainty of liability risk from lawsuits and future claims against the company. While BP and analysts maintain that BP is in a strong financial position and should be able to manage the costs, it's unlikely a decision on the dividend will be made until the oil leak is clearly under control.
"At this stage, it's impossible to predict the longer-term costs, environmental remediation, claims and litigation, but they will be sizable," he said.
A Sign of Progress on the Seafloor
On a more positive note, BP announced that underwater robots had successfully placed a cap on the sheared-off pipe that's connected to the blowout preventer, providing the best opportunity so far to seal the leak. Oil continues to escape from the well through several valves on the cap, but the company said it will slowly begin closing those values overnight.
It will be at least another 48 hours before engineers can assess how much oil and gas is continuing to spew into the Gulf and how much the tanker ships above the well are capturing.