BP CEO Tony Hayward Goes Yachting While Its Partner Prepares to Sue Over Oil Spill
Anadarko Petroleum, one of BP's partners in the damaged well that is gushing oil into the Gulf, broke its silence recently with this little ditty: BP acted recklessly and should pay for all of the costs from the spill. Anadarko's (APC) statement was more than a public venting session for Jim Hackett, its chairman and CEO. It was a well-crafted release meant to mark the beginning of what promises to be a protracted legal battle over responsibility for the massive Gulf of Mexico oil spill.
This latest development puts a rather large crimp in BP's plans to pay for clean up costs and damages from the gushing well, which has dumped as many as 120 million gallons of oil into the Gulf, so far. Although neither Anadarko's threat nor the oil spill response were enough to keep BP CEO Tony Hayward from attending a yacht race Saturday around England's Isle of Wight. And thank God Hayward didn't stay in the Gulf: His 52-foot yacht, "Bob," finished fourth in its class in the world renowned annual 50-nautical-mile race.
Here's what Hackett had to say in Anadarko's Friday release.
The mounting evidence clearly demonstrates that this tragedy was preventable and the direct result of BP's reckless decisions and actions. Frankly, we are shocked by the publicly available information that has been disclosed in recent investigations and during this week's testimony that, among other things, indicates BP operated unsafely and failed to monitor and react to several critical warning signs during the drilling of the Macondo well.Here's the part where Hackett spells it out for BP.BP's behavior and actions likely represent gross negligence of will misconduct and thus affect the obligations of the parties under the operating agreement.
The JOA (joint operating agreement) also provides that BP is responsible to its co-owners for damages caused by its gross negligence or willful misconduct.In other words, Anadarko will try to use a clause within the joint operating agreement to erase its share -- that would be 25 percent -- of the clean up costs and damages from the oil spill. In short, Anadarko will take this to court. Hackett clarified in the statement the company wouldn't pass on any costs to American taxpayers.
For Anadarko, this essentially means it will sue now to force BP to take on 100 percent of the liability, or sue later to seek repayment from BP. BP released a statement that strongly disagrees with Anadarko's allegations and stops just short of saying "we'll take you to court if we have to."
The stakes are high for Anadarko, which would struggle to absorb its share of the costs associated with the spill. Anadarko had revenues of $9 billion last year. BP had $239 billion in revenue. Or looked at another way: Anadarko generated $3.93 billion in cash flow from its operations last year. BP? Try nearly seven times as much, with $27 billion in cash flow from its operations.
Moody's recent decision to cut Anadarko's credit rating to junk status will make paying for the oil spill even more painful -- and expensive. Anadarko will have to borrow funds or sell off some of its non-core assets, something BP already plans to do, to pay for the spill. Anadarko's borrowing costs will be higher now that its credit rating has been cut. In the end, Anadarko may have to delay some of its more promising deepwater prospects, including its latest project offshore Sierra Leone. Photo from Deepwater Horizon Response Joint Command For complete coverage, see: All Things BNET on BP's Gulf of Mexico Spill Related: