Dudley: Spill a "Wake-Up Call" for Oil Industry

Incoming CEO Bob Dudley poses outside BP's global headquarters in London, Tuesday, July 27, 2010. The company announced that Tony Hayward, BP's much-criticized CEO, will be replaced by American Robert Dudley on Oct. 1, as it reported a record quarterly loss and set aside $32.2 billion to cover costs of the devastating Gulf of Mexico oil spill. BP said the decision to replace Hayward, 53, with the company's first ever non-British chief executive was made by mutual agreement. (AP Photo)
AP Photo
Updated at 7:40 p.m. ET

The American who will take over as head of British oil giant BP says he's not underestimating the nature and complexity of what the company must do to restore its reputation and financial strength after the massive Gulf of Mexico spill.

Special Section: Gulf Coast Oil Disaster

Robert Dudley, who will replace Tony Hayward as CEO on Oct. 1, told reporters the spill has been a "wake-up call, not only for BP, but the oil and gas industry overall, and we will be looking deeply at our review of operational safety and what we have learned from this spill."

During his press briefing Tuesday, White House press secretary Robert Gibbs noted the announcement of Hayward's removal as chief executive.

"I don't think that a lot of people in any country are feeling overly sorry for the former CEO of BP," Gibbs told reporters, CBS Radio News reports.

As Dudley was promoted from Managing Director, BP announced a second quarter loss of $17 billion.

To pay for the epic oil spill, B.P.'S forced to sell $30 billion in assets, roughly 13 percent of its global production resources. The company has also set aside $32.2 billion to cover spill costs including $20 billion for its general compensation fund, reports CBS News correspondent Mark Strassmann.

The company has already made a start with the $7 billion sale of gas assets in the United States, Canada and Egypt to Apache Corp.

"It's of course a tragedy and it has large consequences, but we've no doubt that we will be able to rebuild the company," said BP Chairman Carl-Henric Svanberg.

Dudley grew up partly in Hattiesburg, Miss., and has so far avoided any public missteps. He spent 20 years at Amoco Corp., which merged with BP in 1998, and lost out to Hayward on the CEO slot three years ago.

His standing within BP and along the Gulf Coast has risen since he took over response to the oil spill in June from Hayward, who will be reassigned to BP's joint venture with Russia, TNK-BP.

Dudley said today he has great respect for Hayward and great admiration for what he has done. During Hayward's tenure BP has expanded its reach in the United States (which accounts for 40 percent of its market).

Dudley said that BP had no intention of exiting the U.S., despite costly fines and lawsuits expected after government investigations into the spill.

"I think we have a lot to offer in the United States to the oil and gas industry and getting this right, working in the U.S., meeting those commitments and cooperating with officials is vital to BP's future success in America," he said.

The newly-named CEO said Tuesday his top priority was sealing the company's blown oil well for good and cleaning and restoring the Gulf of Mexico.

Though his words weren't all that different, Dudley delivered BP's message - Don't worry, we're going to pay for all this - in a calm manner without Hayward's public impatience and occasional whininess.

And serendipity was on Dudley's side: He was in charge when they finally capped the spewing well, shutting off the flow of oil until a relief well can finish the job.

Dudley told ABC's "Good Morning America" he didn't expect any more oil to gush into the Gulf as BP PLC moves to permanently plug the well with cement.

He told ABC he plans to change the company culture and make sure checks and balances are in place to prevent a repeat of the disaster.

Dudley will return to London when he takes up his appointment and will hand over his present duties coordinating the spill response to Lamar McKay, the chairman and president of BP America.

During a webcast presentation on the company's second quarter results, Svanberg told investors, "BP will change as a result of this accident. . . . We are taking a hard look at ourselves, what we do and how we do it. What we learn will have implications for our ways of working, our strategy and our governance."

Svanberg also said the company was determined to restore value to shareholders, after a 35 percent (or $60 billion) drop in market value, to around $116 billion, since the April 20 explosion of the Macondo well on the Deepwater Horizon platform. Under U.S. political pressure, the company also axed dividends to shareholders this year.

The stock started out marginally higher on Tuesday, but dropped 3 percent in afternoon trade on the London Stock Exchange.

"They have seen enormous loss of capital and of the dividend and the board is committed to creating value to shareholders and believes that we can deliver a stronger BP for them over time," Svanberg said.

Revenue for the quarter was up 34 percent at $75.8 billion, and underlying replacement cost profit - the measure most closely watched by analysts - was $5 billion when adjusted for one-off items and accounting effects. That compared favorably with a $2.9 billion profit for the second quarter of 2009.

In London, Greenpeace protesters closed more than 50 service stations in a protest timed to coincide with the company's earnings update. The environmental action group is calling on Dudley to focus the company on greener and renewable sources of energy.

  • David Morgan

    David Morgan is a senior editor at CBSNews.com and cbssundaymorning.com.