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Financial Times: BP moves to clarify ‘dreadful’ comment

By Ed Crooks
Published: September 26 2007 03:00 | Last updated: September 26 2007 03:00

BP shares fell yesterday after the Financial Times reported that Tony Hayward, chief executive, had told staff that thecompany’s revenues in the third quarter had been “dreadful”.

He also told employees at a “town hall” meeting in Houston to expect a restructuring of the company to reduce its complexity and raise efficiency.

His comments were reported in an internal note of the meeting that was leaked to the FT. The shares fell 17p to 572½p.

BP said yesterday thatMr Hayward had notmade any comment on the outlook for profits. His use of the word “dreadful” referred to operational performance in the third quarter, the company said, although that would clearly have had implications for revenues.

His assessment that BP’s performance was at its worst since the crisis of 1992-93, when the company was forced to cut its dividend, was a reference to its share price performance relative to its competitors, the company added.

Analysts have generally not yet made forecasts for BP’s third quarter,but some said that theyhad already expected the results to be poor, even though the oil price hit a record high, at almost $84 for US crude, during the quarter.

BP has been hit both by unfavourable market moves, including falling refining margins and a drop in US natural gas prices, and by problems with important assets including US refineries and the Atlantis project in the Gulf of Mexico.

In the final quarter of the year and into 2008, however, BP’s performance is set to improve, Mr Hayward told his staff.

Atlantis and the Greater Plutonio field in Angola are expected to begin production before the end of the year. The Texas City and Whiting refineries are expected to be back to full capacity by next year.

Neil McMahon of Sanford Bernstein said the important issue for BP was not the third-quarter results, but its operational performance in the months to come.

“Just having all their operations up and running would be good,” he said. “They don’t need to do anything ahead of their plans; they just need to deliver that plan.”

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