AT A GLANCE: BP CEO Tony Hayward Faces US Lawmakers

17th Jun 2010 16:01

THE NEWS BP PLC (BP, BP.LN) Chief Executive Officer Tony Hayward was grilled by U.S. lawmakers Thursday on the Gulf of Mexico oil spill that threatens four U.S. states. BP, responding pressure from U.S. authorities, agreed Wednesday to put $20 billion in a fund to compensate victims and said it would cancel shareholder dividends. BP said it would also set aside $100 million to help oil-industry workers sidelined by the Obama administration's moratorium on deepwater drilling. THE DETAILS House Energy and Commerce Committee Chairman Henry Waxman (D, Calif.) blasted the CEO, saying congressional investigators "found no evidence that you paid any attention to the tremendous risks BP was taking." Hayward is expected to tell lawmakers on a House Energy and Commerce subcommittee that he understands the "terrible reality" of the situation, and that the exact cause of the spill remains unclear until ongoing investigations are completed. Scientists estimate about 35,000 to 60,000 barrels of oil are flowing into the Gulf each day. The situation began in April when the Deepwater Horizon drilling rig exploded and sank, killing 11 workers and unleashing the worst offshore oil spill in U.S. history. In an effort to earn back goodwill, BP agreed put $20 billion into a fund to compensate businesses and individuals hurt by the spill, which has affected costal areas of Louisiana, Alabama, Florida and Mississippi. BP will reduce capital spending, suspend its dividend and sell assets to raise the cash. The move to halt the dividend could cost BP shareholders, many of them U.K. pension funds, roughly $7.5 billion during the next three quarters. The White House said the compensation fund will be run by Kenneth Feinberg, who previously oversaw the fund that handled claims from victims of the Sept. 11, 2001, terror attacks. EFFORTS TO STOP THE LEAK U.S. Coast Guard Adm. Thad Allen said in a conference call with reporters that the vessel, known as the Q4000, captured 1,200 barrels in the first 12 hours of production on Wednesday, and would add 2,000 to 3,000 barrels a day to the amount captured by the main vessel connected to the mile-deep leak, the Discoverer Enterprise. That would bring the total amount captured to between 16,000 and 17,000 barrels a day. The company said it hopes to have two additional ships in place by the end of June that will allow it to capture to between 40,000 and 53,000 barrels a day. MARKET REACTION BP's ADRs rose 15 cents in recent trading to $32. BP has lost nearly half its market value since April. In London, shares were up 6.8% at 360 pence on hopes the $20 billion deal would ease the political heat on BP. The most active BP bond is the 5.250% note due 2013. It is now quoted at 6.11 percentage points over Treasurys, a tightening of 1.62 points on the day. The cost of insuring BP's debt ticked up after initially declining on news of the agreement with the U.S. Credit default swaps were quoted by Markit at 450 basis points, equivalent to $450,000 to cover $10 million of debt each year for five years, compared with an all-time high of 625 basis points on Wednesday. DOW JONES COVERAGE -US Rep Waxman Blasts BP CEO As Congressional Hearing Begins -WSJ: BP Agrees To $20 Billion Fund -2nd UPDATE: BP Shares Surge After $20B Oil Spill Fund Deal -BP CEO: To Tell Congress He Grasps Spill's 'Terrible Reality' -Adm. Allen: Could Capture 28,000 B/D Of Oil By Early Next Week -For more coverage of the oil spill, please search under the code BP. (END) Dow Jones Newswires June 17, 2010 11:01 ET (15:01 GMT)