An email by Tony Hayward, BP’s chief executive, to the company’s employees offers a glimpse of the internal turmoil the oil spill in the US Gulf of Mexico has caused at the company.
Perhaps the most telling part was that Mr Hayward felt he needed to reassure his staff members that their jobs and pensions were safe and that the $142bn company could afford the massive response it has launched in the wake of the Deepwater Horizon explosion.
Here is an excerpt of his message:
I have said all along that we will be judged by how we respond, and that remains the case. The strength of the BP balance sheet allows us to take on this responsibility. I know that many of you have questions about how this incident will impact BP, your jobs, pensions, and our future plans. We have demonstrated robust cash flow generation over the past few quarters and at the end of 1Q our gearing ratio was below our 20 to 30% target range, at 19% or some $25 billion. We can therefore afford to do the right thing, and we will do just that – our financial strength will also allow us to come through the other side of this crisis, both financially secure and stronger as a result of what we have learned from this tragic incident and how we have responded.
BP’s share price has slipped so much since the accident that it has wiped 20 per cent of the company’s market capitalisation, far more than the cost forecasts for the clean-up. In the email, Mr Hayward put the latest price tag of the spill at $625m dollars, which includes the cost of the spill response, containment, relief well drilling, grants to the Gulf states, settlements and federal costs.
He wrote: “The financial scale of our response is just one illustration of the serious way in which we are stepping up to our responsibility to clean up the spill and mitigate its impacts.”
He said he was determined not to “get distracted” by Congressional hearings – a position that is unlikely to sit well with lawmakers in Washington – and highlighted that BP’s safety record had markedly improved since 2007.
He called the riser insertion tube “a step in the right direction” and noted that BP’s next major intervention would take place next week “when we will attempt a top kill of the well to eliminate the leak completely and seal the well.”
Whether he soothed the nerves of his employees is unclear. But what is apparent from the email is the worry inside BP that the accident could have serious financial ripple effects all the way down the command chain.