On Air Now

Upcoming Shows

Program Schedule »

Listen

Listen Live Now » 1450 AM Holland, MI

Weather

Current Conditions(Holland,MI 49422)

More Weather »
73° Feels Like: 73°
Wind: WNW 8 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Partly Cloudy 65°

Tomorrow

Partly Cloudy 75°

Wed Night

Clear 61°

Alerts

BP seeks to reassure investors over oil spill cost


Louisiana National Guardsmen unravel support straps far a Tiger Dam, to protect the Grand Isle from encroaching oil coming in with the high tide in Grand Isle, Louisiana May 31, 2010. REUTERS/Sean Gardner
Louisiana National Guardsmen unravel support straps far a Tiger Dam, to protect the Grand Isle from encroaching oil coming in with the high tide in Grand Isle, Louisiana May 31, 2010. REUTERS/Sean Gardner

LONDON (Reuters) - BP will seek to patch up its battered share price by reassuring investors the cost of cleaning up the oil spill in the Gulf of Mexico is manageable and will not affect dividends, British media reported on Wednesday.

The oil major's Chief Executive Tony Hayward will tell investors in a call this week the cost of the clean up -- that has so far spiralled to nearly $1 billion -- can be easily absorbed by cash generated from its operations around the world, the Daily Mail said.

BP's failure to stop the oil spill prompted a plunge in the company's share price on Tuesday and the Obama administration said it opened a criminal investigation.

"If our current efforts were to fail and we have to wait for the relief wells to be drilled and had six months of clean-up, we estimate the cost at $3 billion," Hayward told the Daily Mail.

He added this cost must be considered in view of the oil major's "very strong operational performance generally which will result in free cash flows of $7.5 billion to $8 billion," the paper said.

However a source at BP who asked not to be identified said the figure was a rough estimate for ongoing clean up costs, extrapolated from the latest cost update of $990 million, less $40 million for compensation claims, and did not reflect an estimate of total costs.

"No one knows what the total cost is going to be," the source said.

Gordon Gray at Collins Stewart said last week in a research note that clean up costs could be $2 billion this year for BP which carries 65 percent of the total bill as this is its share of the block. Anadarko owns 25 percent and Mitsui 10 percent.

Compensation for damages to people in the Gulf including fishermen and those involved in tourism will likely total another $10 billion, Peter Hitchens, oil analyst at brokers Panmure Gordon said on Tuesday.

Separately the Times newspaper reported Hayward will seek to reassure investors -- who saw $23 billion wiped off the company's share price on Tuesday -- that BP has no plans to cut its dividend, citing sources close to the company.

BP shares have lost more than a third of their value, or about 46 billion pounds ($67 billion), since the leak started. The cost of dealing with the crisis now totals $990 million, and is rising.

(Reporting by Caroline Copley and Tom Bergin; Editing by Dhara Ranasinghe)

Comments