BP Bowl I: US, England Draw Over Latter's 'Spill'

♠ Posted by Emmanuel in , at 6/12/2010 09:27:00 PM
Only yesterday, I mentioned that the World Cup Group C match between the United States and England--both the respective teams' first in the 2010 tournament--had become 'BP Bowl I' in honour of the American convention of creatively naming major football matches. OK, so they were American football matches, but I guess this comes close enough in the context of the current environmental disaster. I will start with some sporting commentary before returning to the matter of crisis response. Just as I thought would happen, the wags (who are a step slower than yours truly or there wouldn't be a point in me blogging, right?) have contributed anecdotal evidence about how fans in South Africa of the respective antagonists have kept BP in mind:
But then again, this is no ordinary time for England and the US to renew World Cup hostilities. The backdrop is one of political tension between the US and the UK over Barack Obama’s mildly xenophobic hostility towards BP over the disastrous oil spill in the Gulf of Mexico. There were a few fans willing to view England v the US as something of a grudge match.

“It’s not British Petroleum anymore,” said Ian Siddall, a 57 year-old British expat from Durban, referring to US politicians’ repeated reference to the oil company’s previous name, even though it has not been used for 12 years. “I really do hope we stuff them at this game now.” Mr Siddall and his wife Jean are not just routine patriotic Brits. They have lived in South Africa for nearly 20 years but continue to make national insurance contributions in the motherland.

Jack Balcom, a 60 year-old manager from Boston, who works for British Aerospace, also had misgivings. “It’s not constructive, not helpful, to blame people for mistakes that are operational,” he said. That heralded an argument with 31 year-old son, Jon, a New York lawyer. Jon: “I’m not happy about Obama’s response, but it’s cause and effect...”
In case you're living in a cave, the event has just ended and the score was a 1-1 draw. I believe that nobody would seriously argue that England were the better side in this match. And, irony of ironies, it was a spilled ball by the British goalkeeper Robert Green of West Ham that resulted in the draw. Throughout the match, England was by far the more confident side, but a weak shot on goal by Clint Dempsey that should have been handled well by Green was bobbled badly. Sounds familiar, eh? Sport reflects life for there are no winners here.

Returning to the ass-kicking contest, I previously noted that the British were unhappy about the halved value of BP stock and the prospect of a withheld dividend payout when somewhere between £1 out of $6 to £8 in dividends paid out by British firms comes from BP. Especially unhappy have been the Conservatives who perceive Americans beating up on the firm when (a) it was an American contractor whose faulty contraption fell to pieces and (b) BP was acting in good faith to control the spill. In any event, BP has now delayed paying out its dividend-out of fear or out of prudence, who knows?
BP is ready to suspend its dividend to guarantee it can meet all the legitimate costs of cleaning up its huge oil spill in the Gulf of Mexico when its senior directors meet US President Barack Obama on Wednesday. Tony Hayward and Carl-Henric Svanberg, BP’s chief executive and chairman, will seek to reach a truce with Mr Obama to end weeks of heated rhetoric from the US administration that has contributed to sharp falls in the company’s share price.

They will promise to retain sufficient cash to meet all legitimate claims, which analysts say could range from $5bn to $40bn [is it just me or does this range not seem to be adequately narrowed down?] However, BP will reject the administration’s calls for the company to pay the wages of all rig workers laid off as a result of the government’s deep-water drilling ban.

BP’s board will hold a tele-conference on Monday to discuss its options including suspending the dividend, paying it into an escrow account to be released once the full costs of the spill are known, and paying a scrip dividend in shares instead of cash. It is unlikely that the board will decide to pay the full cash dividend for the second quarter, which had been due to be announced on July 27. A final decision is likely only after the meeting with Mr Obama.
Like most in the executive branches of government, David Cameron has been more circumspect in handling how the oil spill has put Britain into a bind than his erstwhile Tory colleagues:
On Saturday, David Cameron, the British prime minister, discussed the crisis with the US president over the telephone. According to the White House, the two men reiterated “that BP must do all it can to respond effectively to the situation”. After talking to Mr Svanberg, Mr Cameron was quoted on Friday as saying “it is in everyone’s interests that BP continues to be a financially strong and stable company”.

BP has been sounding out major shareholders over its dividend, previously forecast to amount to 12 per cent of all payments by UK listed companies. Some leading investors said that a deferral or cut in the dividend would be a sensible move to improve relations with the administration, which have become ever more acrimonious in recent weeks.

BP told leading investors that the company had the cash to fund the dividend long-term, but there might be a gap for a couple of quarters for political reasons. The company hopes that in return for a cut or suspension in the dividend it can avert increasingly hostile action from the administration. Some shareholders approved this strategy, although others were concerned that the pressure would continue to mount regardless of the dividend decision...
So, the endgame the British are laying on the table is very much like a World Cup fixture result, indeed. In return for the US government not exposing BP to unlimited liabilities, the firm has volunteered to hold back its dividend payment this time around. BP suggests its tab should amount to no more than $3 to $6 billion. When the long-term viability of your firm (which does over a third of its business Stateside) is in question, I suppose assessing the extent of the ecological damage, holding back dividend payments and momentarily incurring the wrath of those in Tory ranks as well as retirees constitute the lesser of two evils.

Sort of like giving the US a (largely undeserved) draw, eh, London Mayor Boris Johnson?

PS: As an Aston Villa supporter, I have seen the other England goalkeeper Joe Hart--who was on loan from Manchester City to crosstown rivals Birmingham City last season--play very well indeed. Coach Capello, give Hart his chance.