Gulf oil spill: Five numbers that could sink BP CEO Hayward(Read article summary)
Gulf oil spill has cost BP nearly half its market value and at least $10 million a day in potential US fines. Can BP CEO Hayward survive those losses?
The Gulf oil spill has ballooned into such a corporate disaster that embattled BP CEO Tony Hayward might be excused for wanting to take a day off. A congressional grilling? Escalating estimates of the leak?
Who wouldn't want a little rest and relaxation after a week like that? Yachting might not have been the best choice. Talk show hosts excoriated him for that move over the weekend.On Monday, Mr. Hayward canceled his appearance at an international meeting of oil executives. BP said he was too busy and didn't say where he was.
Even without any public-relations gaffes, however, the bad numbers associated with the Gulf oil spill would be capable of denting anyone's reputation. Here are five BP numbers that can sink a corporate career:
1) $2 billion. That's the amount BP has already spent battling the Gulf oil spill (including the more than $105 million the company has paid so far to settle 32,000 claims). It would be one thing if that sum had fixed the problem. So far, the leak from the failed oil well continues.
2) 100,000 barrels a day. That's BP's worst-case scenario for how much oil might be leaking into the Gulf, according to an internal BP document released Sunday by Rep. Edward Markey (D) of Massachusetts, chairman of the Select Committee of Energy Independence and Global Warming. That would be nearly two to three times larger than current estimates.
3) $1,100 per barrel. That's how much BP could be fined for each barrel of oil that escapes into the Gulf under the Oil Pollution Act of 1990. (It could be as high as $4,300 a barrel in the case of "gross negligence.") Given that at least 35,000 barrels per day are leaking into the Gulf and BP claims to be recovering about 25,000, that means at a minimum that BP is racking up fines of $11 million a day. Under the worst case, including a finding of gross negligence, that could rise to $322.5 million.
4) $20 billion. That's the size of the escrow fund that BP and the Obama administration agreed to set up to pay for damages from the spill.
5) $91 billion. The figure represents the amount of market value that BP has lost since April 19, the day before the spill. Back then it was trading a little below $60 a share. Today, it's barely above $30.
It's that final figure by which Hayward ultimately will be judged. Under his watch, the company's value has fallen by nearly half and its reputation is in tatters. BP's board will have to decide if he can survive those numbers.