BP Should Hold Dividend on Spill Costs, Senators Say [View All]

[Joanne98]

Source: Bloomberg


June 3 (Bloomberg) -- BP Plc, struggling to control its gushing oil well in the Gulf of Mexico, should suspend its annual dividend until cleanup and liability costs are determined, two U.S. senators said.

A payout would be “unfathomable” until the obligations are tallied, Democratic Senators Ron Wyden of Oregon and Charles Schumer of New York said yesterday in a letter to Chief Executive Officer Tony Hayward. BP has enough cash flow to keep a 56-cent annual dividend, analysts including Jason Kenney at ING Wholesale Banking said.

Oil began flowing from the well after an April 20 explosion aboard the Deepwater Horizon drilling rig, which BP leased from Transocean Ltd. The well is leaking as many as 19,000 barrels a day, some of which is washing up on the shores of Louisiana and U.S. Gulf Coast states. The explosion killed 11 rig workers.

“We find it unfathomable that BP would pay out a dividend to shareholders before the total cost of BP’s oil spill clean-up is estimated,” the senators wrote. Victims’ families and businesses damaged by the oil “deserve to know that BP will fulfill its obligations to them before its shareholders.”

BP will pledge this week to maintain the dividend, the Times of London reported yesterday without citing a source. BP spokeswoman Sheila Williams declined to comment on the report. The company paid $10.5 billion in dividends last year, according to its annual report.


Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aj7RYQwEcBJQ&pos=2

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This is an outrage.