Tag: Gulf of Mexico

Kiran Stacey

Protestors outside the BP AGMAs we near the end of BP’s AGM, one thing we can report is that Bob Dudley is still standing. Which is more than can be said of several protesters against the development of Canadian oil sands who were carted out, in some cases lifted off their feet, after shouting across Mr Dudley as he tried to defend such developments.

It has not been an easy ride for Mr Dudley in his first AGM as CEO, nor for the chairman Carl-Henric Svanberg. Several representatives of Gulf of Mexico communities were banned and if the company thought barring such people would limit criticism on this front they were wrong. One of the toughest moments for the board came when one woman read out a testimony excoriating the company from the father of Gordon Jones, one of the rig workers who was killed almost a year ago today.

BP will not pay bonuses for last year to any of the executive directors involved in the disastrous Gulf of Mexico spill, but the UK oil group has awarded partial pay-outs to two directors for meeting specific divisional targets.

Bob Dudley, chief executive, his predecessor Tony Hayward and Andy Inglis, the former head of exploration and production who left the company last October, have all been denied an annual bonus for 2010 and no director will receive shares under the long-term remuneration plan running from 2008 to 2010, BP disclosed in its annual report.

Sheila McNulty

When Hercules Offshore agreed to buy Seahawk Drilling’s 20 jackup rigs, the obvious question was whether it planned to use them in the Gulf of Mexico. After all, Seahawk is only focused on the Gulf, and it is pricey to move rigs.

But Hercules chief executive John T. Rynd says he got a good deal on the rigs. Seahawk agreed late Friday to sell substantially all its assets to Hercules in a cash and stock deal. The deal includes $25m in cash and 22.3m Hercules shares, which, based on the February 10 closing price of $3.62 per share, put the value of the transaction at $105m.

The asset sale is to be done through a Chapter 11 bankruptcy filing in which Seahawk will seek expedited hearings to obtain court approval. The companies expect to the close the transaction – subject to the various approval required – in the second quarter of 2011.

Ed Crooks

The civil suit against BP brought by the US government on Wednesday had been inevitable since we first found out that thousands of barrels of oil were spilling into the Gulf of Mexico. The timing of Wednesday’s announcement, mandated by the judge at the New Orleans court where the trial will be held, was the only surprise. It perhaps did not send the best message about the business-friendly nature of the administration, on a day when President Obama was courting many of America’s top CEOs.

The share price reaction was modest, reflecting the fact that while the headlines are terrible for sentiment, investors always knew this day would come. The news looks bad for BP, but shareholders can still hope for better, as the Lex column points out.

Nevertheless, the Department of Justice’s action is a salutary reminder that, eight months after the fatal accident on the Deepwater Horizon, and three months after the ill-fated Macondo well was sealed for good, BP is still not even close to finding out exactly how much the disaster will cost.

Kiran Stacey

The Obama administration has decided not to grant any new leases in the eastern Gulf of Mexico, off the coast of Florida, for the foreseeable future, as a result of the BP spill.

AP broke the story, reporting that the ban would last seven years:

A senior administration official told The Associated Press on Wednesday that drilling leases won’t be considered in the waters off Florida as part of the change. He spoke on condition of anonymity because the decision hadn’t been announced yet.

He said that because of the BP spill, the administration now understands the need to elevate safety and environmental standards. Before the spill, the administration had considered a plan to allow drilling in the eastern Gulf.

One note of caution: the NY Times has the same story, but is reporting that the ban would last “at least for the next five years”. Presumably the picture will become clearer when Ken Salazar has made the formal announcement this afternoon.

Sylvia Pfeifer

Royal Dutch Shell’s announcement this morning that it is selling its holding in six oil and gas fields in the Gulf of Mexico is by no means a signal that the Anglo-Dutch major is about to reduce its presence in the area. The company is doing what most of its peers have been doing - selling non-core assets and focusing on higher-quality ones.

At the same time, most of the supermajors are also increasing their capital expenditure budgets in an attempt to increase production growth – one of the themes to come out of the third quarter reporting season that just ended which saw Exxon and Shell report sharply higher profits, fuelled by strong crude prices and better refining margins.

Sheila McNulty

Chevron’s announcement that it will lead a $7.5bn investment in the deepwater Gulf of Mexico underlines how eager the industry is to get back out there despite BP’s accident.

Certainly the new permitting process will have its challenges, but the majors need the gulf to bolster production in a world of increasingly inaccessible resources.

Wood Mackenzie, the energy research firm, underlines in a recent report how important deepwater has become to the industry:

A push into deeper water has been one of the key industry themes of the last 20 years. Over 130bn barrels of oil equivalent have now been discovered in these frontier regions, with $130bn of  value created by explorers in the last decade. Oil production from deepwater fields will contribute 7 per cent of global output in 2010, up from 2 per cent in 2000, and the proportion is expected to increase to over 10 per cent by 2020.

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