Two years after the Well From Hell, Bob Dudley has steered BP to one of the great corporate survival stories in history. But he’s not bragging about it—for good reason
Two years ago, at the apex of the worst moment in the history of BP—one of the worst for any company ever, actually—I sat with then CEO Tony Hayward at his emergency command centre in Houston. Eleven workers had died on the Deepwater Horizon. Screens throughout the centre showed oil billowing into the murky depths of the Gulf of Mexico. Hayward was calm but also a bit flip—his comment to me that he was sleeping fine at night roared around the world as soon as I reported it.
In that same corporate bunker I met Bob Dudley, who before the spill had been running BP’s operations in Asia and the Americas. He too was disarmingly calm, but unlike Hayward he exuded a humble, disciplined confidence (learned in part from his father, a Navy officer).
Dudley already had a reputation as cool under fire, having previously run BP’s Russian joint venture, and he recounted for me how he had fled from Kremlin goons, who sought to detain him and coerce him into signing oil and gas rights back to the government. Yeah, Deepwater Horizon was bad, but he’d handled big challenges before.
Within four months, as BP shares halved and talk swirled about it seeking bankruptcy protection, the axe fell on Hayward, the only public culprit of this mess. Dudley was tabbed with saving the ship. And he has done so.
Last November the Coast Guard approved BP’s plan to switch most of its coastline efforts from cleanup to monitoring. The same month BP started drilling its first new post-spill well, in 6,000 feet of water at the Kaskida field. In March, BP reached a tentative $7.8 billion settlement with roughly 100,000 fishermen, hoteliers and other plaintiffs, avoiding months of courtroom wrangling. That’s on top of $14 billion already spent on cleanup and $8.3 billion on damage payouts. Tourists are again returning to Gulf beaches, as drill bits turn offshore.
The scope of this turnaround ranks among the more incredible corporate comeback stories in business history. Since last year BP has risen a remarkable 379 spots to 11th place in The Forbes Global 2000 survey. Key to the climb is a return to profitability in a big way. In 2010 BP took a $41 billion charge against earnings, giving shareholders their financial whipping all at once rather than dribbling it out over years. In 2011 BP reversed the previous year’s $3.3 billion net loss, posting $26 billion in income, with promises of a further profit surge in the years ahead, thanks to high gasoline prices and a new slate of projects coming online.
BP has reinvigorated its exploration efforts with a series of strong deals in places like India and Brazil and the Utica Shale of Ohio. And despite setbacks last year in Russia and a serious 13 percent decline in oil and gas volumes since the spill, things are looking up.
But if you’re expecting to hear Bob Dudley crowing or taking a victory lap, think again. Despite a record any fellow chieftain would be unable to keep silent about, neither Dudley nor US chief Lamar McKay or even the new safety guru, Mark Bly—whose efforts are key to rebuilding trust in the company— would agree to an interview.
What gives? Simple. BP has no interest in discussing its success, a spokesman tells me. Rather than drawing attention to itself, BP needs to remain as humble as possible. Otherwise there will be no end to the lineup of aggrieved parties with open palms and dollar signs in their eyes. Chief among those is the US Department of Justice. BP is still on the hook to pay federal fines under the Clean Water Act, anywhere from $1,100 to $4,300 per barrel, and some workers remain in the shadow of criminal prosecution.
It’s been quite a ride for Dudley, 56, who in April 2010 had left his base in London for a business development expedition to India (happy to no longer be looking over his shoulder on Moscow street corners). As he explained in a speech last year, one morning he turned on the TV to catch up on news, only to find footage of the Deepwater Horizon inferno. Within days he was in Houston leading the cleanup and recovery efforts. By October he was CEO.
“He was a safe pair of hands,” says analyst Oswald Clint of Bernstein Research. “He was perceived as that before, and that's still the case today.”
Among its $23 billion in divestitures since the spill: BP has dished some mature US oilfields to Apache Corp and is still seeking a buyer for two refineries, including one in Texas City, Texas, the site of the 2005 explosion that killed 15 workers.
Yet there was never a question of BP pulling out of the Gulf of Mexico, one of its biggest operating areas, where it remains the leading producer, sucking in 261,000 barrels per day. And the company has promised growth here from finds like Kaskida, Gila and especially Tiber, which was discovered in 2009 at a depth of 35,000 feet and is thought to hold more than 3 billion barrels. As BP brings 15 big new projects online by 2015, it predicts a 50 percent increase in free cash flow (assuming $100 oil).
(This story appears in the 08 June, 2012 issue of Forbes India. To visit our Archives, click here.)