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Spill Claims Rising, BP Announces Weak Results

July 30, 2013 by

BP’s chief executive, Robert W. Dudley, told reporters that the company was determined to fight what he called “false and fictitious” claims under a settlement last year with lawyers for businesses that incurred damage from the spill.

The oil giant said that the administrators of the settlement had made excessive payments to businesses, including to some that did not suffer damage. Mr. Dudley added that BP would try to recover payments already made if it considered them unfair.

BP originally estimated that the settlement would cost $7.8 billion, but increased that estimate on Tuesday to $9.6 billion, stressing the final cost would most likely be “significantly higher.” While the company still has about $6.9 billion in a fund to pay such damages, BP is setting aside more money to cover potential legal costs.

The overall charges stemming from the spill rose $200 million to $42.4 billion at the end of the quarter. Separately, the first phase of a civil trial in New Orleans to determine the liabilities of BP and other companies finished in April and is scheduled to resume on Sept. 30. Billions of dollars in damages for BP will be at stake in the court’s ruling. Mr. Dudley said he thought it was “highly unlikely” that BP would enter into detailed settlement discussions in the case.

“As we continue to fight what I think are absurd outcomes,” he said, “we want everyone to know that we are digging in and are well-prepared for the long haul on legal matters.”

BP shares were down about 3.4 percent in London.

The company’s tough stance came as BP reported second quarter profit of $2.7 billion after certain adjustments, down 25 percent from the previous year and substantially below analysts’ consensus. The company said lower oil prices, as well as unfavorable tax rates, in Russia and elsewhere, weighed on its results.

The company also continues to deal with the repercussions of the gulf spill, which left 11 people dead and spilled millions of barrels of oil. BP’s output in the United States dropped 4.4 percent from the previous year, reflecting asset sales and a post-spill moratorium on drilling. BP said that production in the third quarter was expected to be lower.

Since 2010, the company has sold about $38 billion worth of assets outside Russia, mostly oil and gas fields that it deemed nonessential, to help pay for its legal issues. It completed a sale earlier this year of its 50 percent stake in its Russian affiliate TNK-BP to Rosneft for $12 billion in cash and shares in the company. These divestments have left BP a considerably smaller company but one that Mr. Dudley said would be more focused, safer and, eventually, more profitable.

“We continue to build a strong platform to deliver value and sustained growth in operating cash flow,” he said.

Peter Hutton, an analyst at RBC Capital Markets in London, wrote in a research note on Tuesday that, given the lower production and maintenance issues, “signals of operating momentum remain difficult to show.”

A central reason for BP’s disappointing performance was the low contribution from BP’s nearly 20 percent shareholding in Rosneft, the Russian state-controlled oil giant. Mr. Hutton said that BP’s share of Rosneft’s net income, $218 million, was roughly one-third of expectations.

While BP and Rosneft are still in the early days of their partnership, the earnings of the venture, which accounts for 30 percent of BP’s output, may be difficult to forecast. Mr. Hutton said the recent results highlighted “how opaque results are difficult to predict.” BP said that Rosneft’s profit was hit by the weakness of the Russian ruble against the American dollar as well as an export duty regime that has a bigger negative impact at times of falling prices.

BP did have pockets of strength. The company said that it had bought back $2.4 billion worth of shares as of July 26 in what is expected to be an $8 billion program. It also announced that it would pay a dividend of 9 cents a share for the quarter, up from 8 cents the previous year though unchanged from the first quarter.

“As of two or three years ago we were a weaker company,” Mr. Dudley said. “Now our balance sheet is strong again.”

Article source: http://www.nytimes.com/2013/07/31/business/global/bp-reports-drop-in-second-quarter-income.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

At This Girls’ Camp, Crafts Take a Drill Press

August 19, 2011 by Leave a Comment

Though the slim, 5-foot-5 teenager dreams of becoming a basketball star, Nautika now has a backup plan after her weeklong immersion course: a career in manufacturing.

Just over a quarter of the 11.7 million workers in manufacturing are women. But Gadget Camp, a workshop for girls in this suburb west of Chicago, is part of an effort to change that.

Although the economy is wobbling and nearly 14 million people are looking for work, some employers are still having a hard time finding skilled workers for certain positions. Manufacturers in particular complain that few applicants can operate computerized equipment, read blueprints and solve production problems. And with the baby boomers starting to retire, these and other employers worry there will be few young workers willing or able to replace them.

Gadget Camp, sponsored in part by a foundation affiliated with the Fabricators and Manufacturers Association, which provided financing to nine other camps this summer, is intended to help over the long haul by exposing girls to an occupation they might previously have considered unappealing, if they considered it at all.

By the last day of camp, Nautika had told her parents that manufacturing was “cool.” Fashioning a lamp shade out of a thin piece of cardboard, she mused, “I have two good careers ahead of me.” Since the fragile recovery began, manufacturing is one of the few sectors that have added jobs. But the image of manufacturing as an occupation of the future has been tarnished by the exodus of factory jobs to foreign sites and the use of machinery to replace workers. Younger people, especially, see more alluring opportunities in digital technology, finance or health care.

“The perception is that there are no jobs in manufacturing,” said Susan H. Palisano, director of education and training at the Connecticut Center for Advanced Technology, a nonprofit group in East Hartford that promotes manufacturing employment and has run summer programs for middle-school students for the last three years. “It seems that everybody had an uncle or grandfather that got laid off.”

Across the country, a handful of companies, nonprofit groups, public educational agencies and even science museums are trying to make manufacturing seem, well, fun. Focusing mainly on children aged 10 to 17, organizations including the Da Vinci Science Center in Allentown, Pa.; and Stihl, a maker of chain saws and other outdoor power equipment in Virginia Beach, Va., run camps that let students operate basic machinery, meet workers and make things.

Nuts, Bolts Thingamajigs, the foundation that helped sponsor the Gadget camp in River Grove, has awarded $2,500 grants to 112 manufacturing-themed camps — most of them for boys and girls — around the country since 2004. “It’s not easy getting people into the career field,” said Marcia Arndt, a board member of the foundation. “I think there’s a myth out there that manufacturing is dirty and undesirable, but it’s really highly technological.”

Impressions also persist that manufacturing is a man’s job. Technical fields in general, and those that require scientific or mathematical backgrounds, are indeed dominated by men. Yet a Commerce Department report released early this month showed that women in such fields earn 33 percent more, on average, than women working outside of scientific and technical fields, a higher premium than men enjoy in similar occupations.

Antigone Sharris, who came up with the idea for the all-girls Gadget camp, had worked extensively in manufacturing before becoming an instructor in electronics, welding and computer-aided machinery at Triton College, a two-year public school here that provided some funding for the camp.

Article source: http://feeds.nytimes.com/click.phdo?i=ab16d2db4569a4464e313a2314bf31be

Filed Under: Business News Tagged With: , ,

DealBook: Moody’s Sees Benefits for Banks From Consumer Bureau

July 25, 2011 by Leave a Comment

Richard Cordray, President Obama's choice to lead the new Consumer Financial Protection Bureau.Michael Houghton for The New York TimesRichard Cordray, President Obama’s choice to lead the new Consumer Financial Protection Bureau.

The new Consumer Financial Protection Bureau has ignited fear on Wall Street. But many banks may eventually benefit from the regulator’s careful watch, according to a new report by Moody’s Investors Service.

The bureau, Moody’s said, could be the “medicine” that tames the financial industry’s risk-taking ways. Over the long haul, safer lending practices “could limit future credit and litigation costs for the firms,” said Moody’s, one of the largest credit rating agencies.

The consumer bureau, which formally opened its doors last week, can write new rules for financial firms, examine their books and issue enforcement actions. A chief component of the Dodd-Frank financial regulatory law, the agency will focus on mortgages and credit cards, among other financial products.

“The stricter policing of consumer lending products and services will ultimately make banks safer by steering them away from riskier products such as subprime mortgages,” the report said.

While the bureau will oversee the nation’s 110 largest banks, it also can take aim at some less-regulated corners of the finance industry, including tens of thousands of payday lenders and mortgage companies. This authority, which kicks in once the Senate confirms a director to lead the agency, is a potential big win for the banks.

“Once the bureau gains purview over nonbanks as well, it will level the playing field by applying the same controls and constraints to nonbanks as to banks,” according to the report.

President Obama last week nominated Richard Cordray, the bureau’s enforcement chief, to the director spot. Republicans have indicated they will oppose the nomination.

Once the consumer bureau does receive a leader — and oversight over the nonbank lenders — it “will likely eliminate or at least significantly mitigate the competitive pressures that caused banks to engage in a ‘race to the bottom.’”

Of course, as the bureau threatens to crimp banking fees and overhaul lax mortgage servicing standards, bank profits could sink.

“Certain elements of the C.F.P.B. are credit negative for large U.S. banks, in particular those with substantial mortgage operations,” Moody’s said. “Such firms are likely to be confronted by new national standards and attendant compliance-related costs related to mortgage servicing.”

Article source: http://feeds.nytimes.com/click.phdo?i=be3ee9cbd977473d5311960937c35d16

Filed Under: Business News Tagged With: , ,