BP To Shareholders - Don't Worry, Cost Of Disaster Won't Affect Dividends - Reuters

[hatrack]

Whew, what a relief!

LONDON (Reuters) – BP will seek to patch up its battered share price by reassuring investors the cost of cleaning up the oil spill in the Gulf of Mexico is manageable and will not affect dividends, British media reported on Wednesday.

The oil major's Chief Executive Tony Hayward will tell investors in a call this week the cost of the clean up -- that has so far spiralled to nearly $1 billion -- can be easily absorbed by cash generated from its operations around the world, the Daily Mail said.

BP's failure to stop the oil spill prompted a plunge in the company's share price on Tuesday and the Obama administration said it opened a criminal investigation. "If our current efforts were to fail and we have to wait for the relief wells to be drilled and had six months of clean-up, we estimate the cost at $3 billion," Hayward told the Daily Mail.

He added this cost must be considered in view of the oil major's "very strong operational performance generally which will result in free cash flows of $7.5 billion to $8 billion," the paper said.

EDIT

http://news.yahoo.com/s/nm/20100602/bs_nm/us_bp

[phantom power]

1. I --

no, I'm not going there.

[Captain Hilts]

2. Stunning. nt

[emulatorloo]

4. I get a feeling that BP will tell any lie to their investors to keep them from dumping

their investments.

[mikita]

3. yeah,

the COST can be easily absorbed. Too fucking bad the f'ing SPILL can't be easily absorbed. Words fail me.....

[louis-t]

5. That's the same thing Ken Lay told Enron people.

"We're doing great, keep buying that stock" while cashing in his own. The government may need to seize BP's assets to pay for the damage. They will try to hide assets, they will declare bankruptcy, they will give the CEO's multi- million dollar payoffs, they will delay and stonewall and counter-sue...

[no_hypocrisy]

6. Supports my theory that corporations will do whatever it takes to avoid playing with dividends.

In 1991, GM announced it wasn't going to pay dividends to its shareholders. I saw that a sign that the economy was going to slump badly. OK, maybe one situation had nothing to do with the other, but here's how I saw the "big picture":

GM didn't want to cut or worse, eliminate its dividends unless it truly had no other option in order to keep the corporation viable. The very last thing it would do before filing for bankruptcy would be to lower or suspend the payment of dividends. And with GM being so big and integral to the American Economy, it was a foreboding bell-weather of doom. It was around the time of Operation Desert Storm (the first Iraq War).

So my reading of BP's diligence to protect its shareholders is:
1) It isn't bankrupt (yet).
2) BP is bribing the remaining shareholders from selling their equities.