James Moore: A true turning point for BP fortunes or just another clean-up job to soothe the City?


Outlook So Bob Dudley, BP's American chief executive, thinks the business has reached "a definite turning point". Is he right? The good news has hardly been gushing forth from the group's wells, but there has been a drip, drip of better tidings. Yesterday seemed a case in point. Third-quarter profits, for example, were (a bit) better than the City had expected. Production hit a low point but should pick up from here.

Mr Dudley even offered a banana or two to the company's restive shareholders, with the prospect of improved dividends and more share buybacks. These are the intended rewards from the strategy he spelt out, which will see the group focusing on his idea of its strengths: deepwater operations (yes, really), exploration, managing giant fields, etc.

He's also promised to invest in the business and pay close attention to safety. Too little focus on the latter at the expense of keeping the City happy was where the seeds of the company's recent travails were sown under the tenure of Lord Browne.

All well and good, then. But it's premature to be talking of turning points and there is plenty of evidence that Mr Dudley's bold assertion might be just so much spin to get the City to pipe down for a while.

BP appears to be operating a very conservative balance sheet, with a multi-billion-dollar cash pile and low gearing. The company is also raising its target for divestments to $45bn (£39bn) from $30bn, generating more cash.

It is true that compensation claims from the Gulf of Mexico spill's victims have slowed, and just last week BP settled with Andarko, one of the minority partners in the stricken well, which has dropped its claim of gross negligence and paid $4bn into the compensation fund (thereby putting pressure on Halliburton and Transocean, the remaining contractors, to do the same).

But there's still a civil case next February and the US Department of Justice to deal with. Being found "grossly negligent" would be a kick to the stomach. America's legal system isn't renowned for having much sympathy for foreign companies even if they're run by Americans and mostly owned by Americans too.

Then there's the continuing fallout from BP's ill-fated attempt to forge an alliance with Russian oil giant Rosneft and the possibility of costly lawsuits from aggrieved partners in the Russian TNK-BP joint venture.

Perhaps all this explains just why BP is operating such a conservative balance sheet. It might need the cash.

Most of the foul black gunk that gushed from Deepwater Horizon has now been removed from the beaches of Louisiana, but locals are still licking their wounds and as the US presidential campaign heats up no one will shed any tears if BP gets another beating.

So let's just wait a little while before judging whether Mr Dudley is right to say that BP has turned a corner and the black gunk has been cleaned off his company's green logo.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?
How Tansy Davies turned 9/11 into her opera 'Between Worlds'

How a composer turned 9/11 into her opera 'Between Worlds'

Tansy Davies makes her operatic debut with a work about the attack on the Twin Towers. Despite the topic, she says it is a life-affirming piece
11 best bedside tables

11 best bedside tables

It could be the first thing you see in the morning, so make it work for you. We find night stands, tables and cabinets to wake up to
Italy vs England player ratings: Did Andros Townsend's goal see him beat Harry Kane and Wayne Rooney to top marks?

Italy vs England player ratings

Did Townsend's goal see him beat Kane and Rooney to top marks?
Danny Higginbotham: An underdog's tale of making the most of it

An underdog's tale of making the most of it

Danny Higginbotham on being let go by Manchester United, annoying Gordon Strachan, utilising his talents to the full at Stoke and plunging into the world of analysis
Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police

Steve Bunce: Inside Boxing

Audley Harrison's abusers forget the debt he's due, but Errol Christie will always remember what he owes the police
No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat