BP Board Said to Approve Dudley

BP Board Said to Approve Dudley to Replace Hayward (Update1)

By Stanley Reed

July 26 (Bloomberg) -- The board of BP Plc approved a plan to name Robert Dudley as the company’s chief executive officer, replacing Tony Hayward after the company caused the biggest oil spill in U.S. history, two people familiar with the situation said.

Dudley, the director of BP’s oil spill response unit, will take the helm on Oct. 1, one of the people said, declining to be named before an official announcement tomorrow. The decision was reached in discussions with board members about how best to take BP forward and rebuild its U.S. position, the person said.

“He’s been in charge of the Gulf cleanup, and it seems that he’s been taken reasonably well,” said Colin Morton, who helps manage about $1.4 billion at Rensburg Fund Management in Leeds, England, and holds about 6.5 million BP shares. “Part of this is to appoint somebody whose reputation has not been soiled by the whole thing.”

Hayward has faced public anger in the U.S. and criticism from lawmakers over his handling of the spill that was triggered by an April 20 explosion on the Deepwater Horizon rig, which killed 11 people. Dudley, 54, was born in New York and grew up in Mississippi, part of the Gulf Coast region suffering environmental and economic damage from the spill. BP on June 23 appointed him to manage its response to the leak.

‘More Straightforward’

“The fact he is American should help to keep things a little more straightforward in his dealings with the U.S. administration,” said Ted Harper, who helps manage $6.8 billion at Frost Investment Advisors in Houston. He doesn’t hold BP stock. “Dudley’s most important task will continue to be making sure that the well is capped.”

BP rose 4.6 percent to 416.95 pence in London trading today.

BP said today that no announcement would be made on management changes before tomorrow morning, when the company reports its second-quarter earnings.

Hayward may be entitled to receive his pension fund, worth 10.84 million pounds ($16.8 million) at the end of last year, as well as a year’s salary of about 1 million pounds.

The company has seen its market value fall by about 45 billion pounds as it battled to stop the spill. The well has now been sealed, and BP plans to permanently plug it with cement next month.

Russian Venture

Dudley has spent about 30 years in the oil industry, including a stint as CEO of BP’s Russian joint venture, TNK-BP, starting in 2003. That job ended after disputes with Russian partners led to Dudley fleeing Russia in 2008, citing “sustained harassment” amid court battles and labor and tax inspections.

While seeking to contain public outrage over the environmental damage, Hayward made several gaffes, including saying he wanted his “life back” and calling the spill “relatively tiny” in a “very big ocean.” The well spewed 35,000 to 60,000 barrels of oil a day from a mile deep in the water, according to a U.S. government-led panel of scientists.

The company’s success capping the runaway well after three months will limit its final liability for the spill to $33 billion, according to the median forecast of analysts surveyed by Bloomberg.

The 40-foot stack of valves halted the flow a week before Tropical Storm Bonnie blew through and forced a temporary halt to drilling of a relief well that will seal the leak for good. Worst-case forecasts for the crisis had pegged the bill as high as $100 billion.