BP CFO: No Clarity On Financial Position Until Leak Under Control

16th Jun 2010 21:01

LONDON (Dow Jones)--BP PLC (BP) will have no clarity on its ultimate liabilities and penalties from the Gulf of Mexico oil spill until the leaking well has been capped, and will maintain a conservative approach to its financial position until then, the company's Chief Financial Officer Byron Grote said Wednesday. BP's board is focused on what is right for the company in the long-term and will reduce spending to ensure that cash flows exceed its liabilities in the coming quarters, Grote said in a conference call. The company will cut its organic capital expenditure this year by 10% to $18 billion and by a greater amount in 2011, with most of the cut in exploration and production, he said. It is prudent for BP to withhold its dividend until the picture is clearer in early 2011, Grote said. BP will keep its gearing level, the ratio of net debt to net debt plus equity, in the 20% to 30% target range, he added. BP has spent $1.75 billion on the spill response to date, Grote said. BP promised President Barack Obama Wednesday it would establish a $20 billion fund to cover oil spill liabilities gradually over the next three and a half years. It also said it would withhold its first, second and third quarter dividend payments from shareholders, totaling around $7.8 billion. Company website: http://www.bp.com -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (END) Dow Jones Newswires June 16, 2010 16:01 ET (20:01 GMT)