BP's Dudley Says He's Open to Radical Restructuring of Company

- BP's Dudley Says He's Open to Radical Restructuring of Company

Tuesday, July 26, 2011
Dow Jones Newswires
LONDON
by Alexis Flynn

BP hasn't ruled out a major restructuring along the lines of the recent overhaul announced by ConocoPhillips, but the British giant will prosper either way once it gets beyond the current difficult transition period, Chief Executive Bob Dudley said Tuesday.

"We're not ruling it in or out. What we do often is review our portfolio and consider our options," Dudley told reporters.

Speculation has grown in recent weeks as to whether BP might consider following ConocoPhillips (COP) in separating its exploration and production, or upstream, and refining and marketing, or downstream, divisions into different businesses. Those questions took on new immediacy Tuesday after BP reported quarterly earnings that missed expectations due in part to a big drop in oil and gas production. The news drove BP shares down more than 2%.

Dudley Tuesday was non-committal on the Conoco plan, while BP's top refining executive pointed out the two companies have very different downstream profiles.

Analysts and some shareholders have argued that a major ConocoPhillips-style shakeup would lead to an immediate improvement in the value of BP stocks, which has lost a third of its value since the Deepwater Horizon disaster last year.

Dudley insisted that BP was capable of radical change if needed. Dudley said he was "committed to seeing the true value of the business more strongly reflected in our share price," but that 2011 was a "year of consolidation," as BP recovered from the fallout of the Gulf of Mexico oil spill.

But head of refining and marketing Iain Conn made it clear Tuesday that the company still believes refining can be a good business. "If you look at Conoco's downstream earnings per unit of throughput, its about half ours," said Conn.

"We're a very different downstream company, we have a global downstream company unlike Conoco, which is largely a U.S. one, and we have large sources of growth in that downstream company," said Conn.

While BP said plans to sell its U.S. Texas City and Carson refineries were progressing, Dudley said Tuesday it planned to invest $1 billion over the next five years in modernizing the Whiting refinery in Indiana.

Separately, Chief Financial Officer Byron Grote said the BP's completion of the $30 billion divestment program aimed at recovering some of the costs from the Gulf of Mexico doesn't necessarily mean it will cease asset sales. BP has so far sold about $25 billion in assets of the $30 billion it has targeted since the U.S. Gulf accident.

"We will continue to actively look at the portfolio. The end of the $30 billion doesn't mean the end [of our asset sales]," said Grote.

Copyright (c) 2011 Dow Jones & Company, Inc.

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