BP reported one of the worst-ever losses in British corporate history yesterday after estimating the total cost of the Gulf of Mexico oil spill at $32bn (£21bn).
Alongside financial results showing the group plunging an eye-watering $17bn in the red in its second financial quarter, the beleaguered company also revealed plans to sell $30bn-worth of oil and gas reserves.
The plan is a massive expansion of BP's existing commitment to sell $10bn-worth of assets to fund a $20bn fund for Gulf coast residents affected by the vast leak from the broken Macondo well. By boosting cash reserves and cutting its debt by about $10bn, BP hopes to ensure it is sufficiently financially strong to deal with whatever claims it faces.
Carl-Henric Svarberg, the BP chairman, stressed the company's commitment to remain in the US, despite the political fall-out from the disaster that claimed the scalp of Tony Hayward yesterday. "We won't run away when we have capped the well," Mr Svarnberg said. "We are there for the long run and to rehabilitate our reputation."
The task of restoring the group's reputation will fall to Bob Dudley, announced as Mr Hayward's successor. Mr Svarberg said the Deepwater disaster will prove a "watershed moment" and that BP will be "a different company" going forward, hence the need for a new chief executive. But both out-going Mr Hayward and in-coming Mr Dudley were vague on the details of any changes in advance of the string of investigations into the causes of the explosion due to report in the coming months.
"There is no question we will learn a lot from the investigations into the incident, as will the whole industry," Mr Dudley said. "There is no question that the industry globally needs to rethink safety systems, fail-safe systems, the equipment used in the frontiers of deep water, as well as how we operate with contractors."
None of BP's estimated costs cover the possibility of the company being found criminally negligent.
"The incident was a complex industrial accident that includes the judgment of people and multiple failures of equipment by a number of companies," Mr Dudley said.
In the meantime, executives were keen to stress that although the sale programme will raise a lot of money, it represents less than 10 per cent of the company's total portfolio and will not materially change its size and character.
"We recognised that we created a liability of $30bn, so we must make these disposals and then move on," Mr Hayward said. The process has already started. BP sold oil and gas in North America and Egypt to Apache, a US company, for $7bn last week – a deal which values the company's exploration and production assets alone at $300bn, according to the company.
BP's massive loss cuts nearly $10bn off its US tax bill for the quarter. Stripping out the one-off cost of the Deepwater disaster, the company's underlying profits shot up by a whopping 72 per cent to $5bn compared with the same period of last year, thanks to the rising oil price and economic recovery.
But the suspension of BP's dividend – which represents up to 12 per cent of all British dividend pay-outs – will remain in force until February at the earliest.
BP's stock closed down by more than 2.5 per cent at 406p yesterday. Despite significant recent gains, following successes in capping the leak, the share price is still a massive 38 per cent down since the explosion on 20 April, wiping some £4.7bn off the company's value.