Following a better day for BP in the markets, the oil company says it could cut dividend payouts to shareholders as costs continue to rise and the amount of oil spilling out into the Gulf of Mexico remains uncertain. The BP board of directors could consider cutting or deferring the second-quarter dividend due on July 27, reports the Wall Street Journal, or paying all or part of it as an I.O.U. No official decision has been made, says BP CEO Tony Hayward.
Both the cost of the clean-up and the potential liabilities for BP continue to rise for the oil giant, putting pressure on the company to lower or postpone its dividend in order to save up for a long-term recovery. Continuing changes to bottom-line estimates are also harmful to investors who may be exhausted or skeptical over the company’s constant revisions.
Numbers still vary on the amount of oil spilling into the Gulf of Mexico daily. The Obama administration’s scientists, after weeks of scrutinizing undersea footage, now say up to a hundred million gallons of oil may have leaked so far, which doubles estimates made only yesterday and would ultimately mean there is more oil leaking in an hour than BP initially said was leaking every day.
Obama gets British backlash
As BP investors hang in the balance, there are signs the British business and political communities are rallying to support the battered oil company. This week, President Obama told a Today Show television audience he’s figuring out who to call out on the Gulf Oil spill. But the public may be growing resentful of Obama’s protests.
“There is a feeling that perhaps because of Obama’s quite precarious position himself on this issue that he’s using BP as a bit of a scapegoat,” says Caroline Bain of the Economist Intelligence Unit. London Mayor Boris Johnson has gone as far as to call Obama “anti-British”, while another politician accused Obama of “a crude, bigoted, xenophobic display of partisan political Presidential petulance.”
Meanwhile, Obama has suggested he would have fired BP CEO Tony Hayward, and that BP should put off its dividend payments to investors. That could be a hard sell in a country where where many people rely on BP stock in their retirement plans.
British Prime Minister David Cameron said yesterday his government might be willing to help BP in some way, and his top economic minister reinforced BP’s economic value. Cameron will be contacint Obama over the phone this weekend.