UPDATE: BP To Slim Down, Refocus In Wake Of Gulf Oil Spill

27th Jul 2010 09:07

(Rewrites, adds details.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--In the wake of a huge loss due to the Gulf of Mexico oil spill, BP PLC (BP) Tuesday launched a radical shakeup, including plans to sell around $30 billion in assets, appoint a new chief executive and alter the way it does business. The changes will leave the company smaller and focused on restoring its battered reputation, though it will continue to pursue opportunities in deep water and plans to remain as a strong presence in the U.S., senior BP executives said. "The tragedy of the Macondo well explosion and subsequent environmental damage has been a watershed incident," said BP Chairman Carl-Henric Svanberg. "BP remains a strong business with fine assets, excellent people and a vital role to play in meeting the world's energy needs. But it will be a different company going forward, requiring fresh leadership supported by robust governance and a very engaged board." BP posted a loss of $17.15 billion for the second quarter stemming from a pre-tax charge of $32.2 billion to cover future and current costs from containment, cleanup, compensation and fines relating to the Gulf of Mexico oil spill. Although BP has booked the loss now, cash payments toward spill costs, notably into the $20 billion compensation fund, will be spread over several years. To prepare its balance sheet, BP said it will sell $30 billion--about a tenth of the company by some estimates--of exploration and production assets over the next 18 months. It will also lower its current debt level to between $10 billion and $15 billion, compared with net debt of $23 billion at the end of June. "This provides a firm basis for moving forward to reshape the company," said Chief Executive Tony Hayward. "By disposing of assets worth more to others than to BP we can better align our strategic footprint with our global strengths." BP has already agreed to sell a package of assets in North America and Egypt worth $7 billion to Apache Corp. (APA). The company is also in talks to sell its stake in Argentine unit Pan American Energy to Bridas Corp. for around $9 billion, according to a person familiar with the matter. Some of BP's substantial assets in Alaska are also being offered to a number of potential buyers, said another person. BP has confirmed it will sell its natural gas assets in Pakistan and Vietnam. -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (END) Dow Jones Newswires July 27, 2010 04:07 ET (08:07 GMT)