Hayward made changes that boosted BP’s bottom line

LONDON — Two decades ago, Tony Hayward was a “turtle” — one of a handful of young high fliers at BP earmarked for great things, named after the cartoon warriors, the Teenage Mutant Ninja Turtles.

LONDON — Two decades ago, Tony Hayward was a “turtle” — one of a handful of young high fliers at BP earmarked for great things, named after the cartoon warriors, the Teenage Mutant Ninja Turtles.

Fast-tracked through BP’s heavy bureaucracy by the man he would succeed as CEO, John Browne, Hayward took the top job three years ago promising to focus “like a laser” on safety and change the company’s champagne culture. He was supposed to get BP back to basics, and for most of his tenure shareholders were happy with the results.

Then came the rig explosion that set off the worst offshore oil spill in U.S. history, and several weeks in which Hayward repeatedly put his foot in his month while his company appeared incapable of stopping the gusher.

Now the former geologist is set to resign. Following weeks of speculation about his future, Hayward is to step down from the company’s top job in October and will be offered a post at the company’s TNK-BP joint venture in Russia, a person familiar with the matter said Monday.

The person spoke on condition of anonymity because an official announcement had not been made by the British company’s board, which met Monday in London to decide the 53-year-old Hayward’s fate.

Analysts were divided over whether removing Hayward from the company’s top spot was justified, but they acknowledged that it was inevitable despite his success before the Gulf spill in streamlining a bloated company.

“He was always going to be thrown out in the end to appease investors,” said David Battersby, investment manager at Redmayne Bentley Stockbrokers.

But a post at BP’s 50-50 joint venture with Russian oligarchs in fact suggests that the company still holds more faith in their embattled CEO than much of the U.S. public and political establishment.

Analysts consider the venture one of BP’s crown jewels, accounting for a quarter of BP production. But it is a problematic one as Hayward’s likely successor as CEO, Robert Dudley, well knows.

Dudley was forced to flee Russia in 2008, running the company in absentia until that became untenable, after a row with Russian shareholders. That history means that Hayward, who is still well-regarded in Europe, will be a key negotiator for his new boss.

“It’s recognizing that this is a very smart guy and has good contacts,” said Stephen Pope, the chief global equity strategist at Cantor Fitzgerald. “He will be very good at smoothing the way.”

Phil Weiss, an oil analyst with Argus Research in New York, said BP thinks highly of Hayward, “but they have to get him away from this situation.”

Hayward’s elevation to CEO in 2007 was supposed to herald a new era for the company after a series of accidents — including the 2005 Texas City refinery explosion that killed 15 people.

“The task is to restore confidence,” he told the Texas-based Houston Chronicle newspaper shortly after his appointment.

Browne was forced to step down as CEO after admitting to perjury while giving evidence to a court to prevent a newspaper revealing details of his private life. There was little surprise that Hayward was named as his replacement.

It was Browne who, as head of exploration and production in 1991, recognized the young geologist’s potential and marked Hayward out for a fast-track program for young executives. That gave Hayward entry to the inner circle.

He moved quickly through the ranks, from geologist to group treasurer to head of exploration and production — a crucial role at any big oil company.

Before becoming CEO he was instrumental in BP’s expansion into the United States, which involved a number of takeovers, including the 1998 merger with Amoco and the subsequent acquisitions of Arco and Castrol.

The eldest of seven children, Hayward had a far less privileged upbringing than his predecessor — Lord Browne of Madingley to his fellows in the House of Lords.

Browne had been known for his celebrity lifestyle as much as his business successes, and Hayward was seen as a leader who could focus BP more on the bottom line.

Not long before he took over, Hayward told a conference that BP needed to change its leadership style because it was “too directive and doesn’t listen sufficiently well.” He said he was concentrating on “closing the performance gap” with rivals such as Royal Dutch Shell.

Hayward stripped out layers of management and costs across a stumbling and bloated business, improving its refining efficiency and putting the firm on a stronger footing to weather a global downturn.

BP’s market position improved its reputation was rehabilitated. Cost-cutting, which saw around 7,500 positions axed, led to savings of around $4 billion.

Even in the immediate wake of the Deepwater Horizon explosion on April 20 with the loss of 11 workers, Hayward appeared to be able to survive.

Former BP Chairman Peter Sutherland described him as a “superb chief executive by common consent” and British-based investors and analysts were supportive.

But in the U.S., Hayward became the lightning rod for anti-BP feeling and didn’t help matters with a series of gaffes. He raised hackles by saying “I want my life back,” going sailing, and what was viewed as an evasive performance before US senators in June.

President Barack Obama said then that Hayward should have been fired — although BP later cooled the political heat by agreeing to set up a $20 billion compensation fund.

Hayward was called back to London a month ago after the bruising encounter with the congressional committee and has since kept a low profile.

Tom Bower, who wrote a book called “The Squeeze: Oil, Money and Greed in the 21st Century,” suggested Hayward’s response to the Gulf spill was symptomatic of how Hayward “hadn’t changed the culture” at BP following the previous accidents in the U.S.

“He knew what had to be done, but he didn’t do it properly. He was too slow; he wasn’t inspired; he wasn’t focused enough,” Bower told the BBC.

But David Cumming, head of UK equities at Standard Life Investments, said that Hayward was the scapegoat for BP’s “political appeasement” to help rebuild its U.S. reputation.

“I think Hayward has been harshly treated and I think Hayward’s departure is premature,” he said. “We still don’t know the full facts of the spill.”

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

sign
Alberta Biobord Corp. recently hosted a virtual open house from Stettler

The company plans to develop a fuel pellet and medium density fibre board (MDF) plant near the community

ALERT’s Internet Child Exploitation (ICE) Unit
Two central Albertans charged with child porn

ALERT’s Internet Child Exploitation unit arrests 24 suspects

A child writes in their school notebook during a home schooling session in Cremona, Alta., Monday, March 23, 2020, amid the worldwide COVID-19 pandemic. Thousands of students in Calgary will shift to online learning as of today in a bid to curb rising COVID-19 infection rates in the city. THE CANADIAN PRESS/Jeff McIntosh
Alberta begins rolling out AstraZeneca COVID vaccine for those 40 or older

Alberta begins rolling out AstraZeneca COVID vaccine for those 40 or older

Pharmacist Barbara Violo arranges all the empty vials of the Oxford-AstraZeneca COVID-19 vaccines that she has provided to customers at the Junction Chemist which is a independent pharmacy during the COVID-19 pandemic in Toronto, on Monday, April 19, 2021. THE CANADIAN PRESS/Nathan Denette
A CN rail worker stands on an idle locomotive as protesters opposed to the Trans Mountain pipeline expansion block rail lines, in Burnaby, B.C., on Friday, November 27, 2020. THE CANADIAN PRESS/Darryl Dyck
CN makes rival bid to CP Rail’s offer to buy U.S. railway Kansas City Southern

Offer tops proposal made last month by Canadian Pacific Railway

A vial of the Medicago vaccine sits on a surface. CARe Clinic, located in Red Deer, has been selected to participate in the third phase of vaccine study. (Photo courtesy www.medicago.com)
Red Deer clinical research centre participating in plant-based COVID-19 vaccine trial

A Red Deer research centre has been selected to participate in the… Continue reading

sign
Alberta Biobord Corp. recently hosted a virtual open house from Stettler

The company plans to develop a fuel pellet and medium density fibre board (MDF) plant near the community

The controversial Super League is materializing after Madrid and 11 other clubs announced its creation on Sunday. (File photo by BLACK PRESS)
Super League a ‘longtime dream’ for Madrid president Pérez

League created because coronavirus pandemic left clubs in a dire financial situation

San Jose Sharks centre Patrick Marleau (12) skates during the third period of an NHL hockey game against the Minnesota Wild, in San Jose, Calif., Monday, March 29, 2021. Marleau is skating in his 1,757th game. Only one other player in NHL history has hit that mark. THE CANADIAN PRESS/AP-Tony Avelar
Patrick Marleau set to break Gordie Howe’s record for most NHL games played

Marleau was set to suit up for the 1,768th time Monday

FILE - In this Saturday April 17, 2021 file photo, Britain’s Queen Elizabeth II follows the coffin in a car as it makes it’s way past the Round Tower during the funeral of Britain’s Prince Philip inside Windsor Castle in Windsor, England. Now that the Royal Family has said farewell to Prince Philip, attention will turn to Queen Elizabeth II’s 95th birthday on Wednesday, April 21 and, in coming months, the celebrations marking her 70 years on the throne. This combination of events is reminding the United Kingdom that the reign of the queen, the only monarch most of her subjects have ever known, is finite. (Leon Neal/Pool via AP, file)
Queen enters ‘twilight’ of reign after farewell to Philip

Charles’ increased role began gradually

This combination photo shows Oscar nominees for best actress, from left, Viola Davis in “Ma Rainey’s Black Bottom,” Andra Day in “The United States vs Billie Holiday,” Vanessa Kirby in “Pieces of a Woman,” Frances McDormand in “Nomadland and Carey Mulligan in Promising Young Woman.” (Netflix, from left, Hulu, Netflix, Searchlight Pictures, Focus Features via AP)
Oscar predictions: Can anything beat ‘Nomadland’?

Best actress race is perhaps the biggest wild card

Letters
Letter: Restrictions have nothing to do with religion

Many have framed the closure of GraceLife Church near Edmonton by Alberta… Continue reading

LtE bug
Letter: Thanking volunteers in Red Deer

National Volunteer Week is April 18 to 24. At the Canadian Cancer… Continue reading

Letter to the editor
Letter: Good on MLAs for speaking out

This is a letter in regard to MLAs not standing united behind… Continue reading

Most Read