BP executives on Friday sought to reassure shareholders the company has the financial strength to deal with the costs of the Gulf of Mexico deepwater oil blowout and continue to grow the value of the company.
It's too soon to determine what impact the disaster will have on dividends, said Carl-Henric Svanberg, BP chairman.
“Our first priority must be to do the right thing in the Gulf of Mexico,” he said in a webcast.
BP aims to balance the return to shareholders through the payout of dividends to them, long-term growth and a strong balance sheet by maintaining prudent leverage levels, Mr. Svanberg said.
When asked whether the company would suspend its dividend until the ultimate gulf-related liability is determined, Mr. Svanberg said, “That's a good question. It is something we have to follow (to see) if that would come true. We haven't seen anything of that kind that indicates that (curtailment). But of course, it is one of those things we have to understand” once it's time to determine future dividends.
In a separate statement on Friday, Mr. Svanberg said, “We fully understand the importance of our dividend to our shareholders. Future decisions on the quarterly dividend will be made by the board, as they always have been, on the basis of the circumstances at the time. All factors will be considered and the decision taken in the long-term interests of the shareholders.”
BP on June 21 plans to pay its scheduled first-quarter dividend, about $2.6 billion, spokesman David Nicholas said in an interview after the webcast. Company officials expect to announce their decision on plans for a second-quarter dividend July 27 when it releases its quarterly financial results, Mr. Nicholas added.
Tony Hayward, BP CEO, said in the webcast the company “supports the savings and retirement plans of millions of people.”
“We are generating the cash we need to satisfy costs we see,” Mr. Hayward said.
In regard to BP's credit-rating downgrade on Thursday, Byron Grote, CFO, said in the webcast: “We feel like we can deal with whatever sort of turbulence might exist in the debt markets, and we've positioned ourselves to robustly deal with it.”
Mr. Grote noted that BP has $5 billion in cash, $5 billion in bank credit lines and $5 billion in additional short-term financing sources.
Moody's Investors Service downgraded BP's senior unsecured ratings by one notch to Aa2 from Aa1 and the long-term issuer ratings of its BP Corp. North America and BP Finance units to Aa3 from Aa2. Moody's affirmed BP subsidiaries' P-1 short-term debt ratings.
Fitch also downgraded BP, lowering the company's long-term issuer default rating and senior unsecured rating to AA from AA+. It reaffirmed BP's short-term issuer default rating at F1+.
Both Fitch and Moody's placed BP on watch for possible further downgrading.
BP intends to maintain its AA credit rating, Mr. Grote said.