British government officials on Friday took shots at the Obama administration for the barrage of criticism it is leveling at BP PLC (NYSE ADR: BP) over the Gulf oil spill, sparking a rally in its beaten-down shares, even as it weighs cutting or deferring its dividend.
In an apparent swipe at the U.S. President's comments about the British company, Deputy Prime Minister Nick Clegg insisted finger-pointing is unhelpful, "I don't, frankly, think we will reach a solution to stopping release of oil into the ocean any quicker by allowing this to spiral into a tit for tat political diplomatic spat," Clegg told the Daily Mail.
Britain's Chancellor of the Exchequer George Osborne also backed BP with a statement after speaking to BP chief executive Tony Hayward by telephone. "We are all concerned about the human and environmental impact and as the prime minister has said we understand the concerns of the U.S. administration," Osborne told Reuters.
"The prime minister is also clear that we need constructive solutions and that we remember the economic value BP brings to people in Britain and America," Osborne added after calls from British business leaders, politicians and newspapers to defend BP. Some in the British media have portrayed Obama's comments as Britain-bashing.
Their comments came after senior Obama administration officials threatened to increase BP's liabilities for the spill and U.S. lawmakers pressured the company to suspend its quarterly dividend to ensure it has enough cash to pay for cleaning up the mess.
Millions of gallons of oil have gushed into the Gulf since an April 20 explosion on an offshore rig killed 11 workers and ruptured a deep-sea well, which has now become the biggest environmental disaster in U.S. history. On Thursday, U.S. scientists doubled their estimate of the amount of oil flowing from the well,
Shares in BP, which has lost over 40% of their value since the crisis began on April 20, advanced 7% in London trading on Friday, rebounding from Thursday's 13-year low and extending a rally that began in New York on Thursday.
"Possibly people have taken heart from the fact that the political rhetoric is not just one side of the Atlantic," Barclays PLC (NYSE ADR: BCS) analyst Lucy Haskins told Reuters.
British Prime Minister David Cameron, who took office in May, was scheduled to discuss the crisis in a telephone call with Obama on Saturday.
British investors are particularly concerned about the calls from U.S. lawmakers for BP to suspend its dividend.
Initial concern over the dividend surfaced on June 4, when Obama brought up BP's $50 million public-relations advertising campaign and the company's $10.5 billion annual dividend.
BP may cut or defer the $2.5 billion dividend due to be announced on July 27 or offer scrip — an IOU to shareholders, The Wall Street Journal reported Friday.
"We are considering all options on the dividend. But no decision has been made," BP's Hayward told the Journal.
The Times of London, citing people familiar with the situation, reported Friday that BP will place the funds in an escrow account until the company can determine its liabilities from the Gulf of Mexico oil spill.
Roughly 40% of BP's shareholders reside in the U. S., with an equal amount based in Britain.
News & Related Story Links:
- Daily Mail:
Clegg warns against transatlantic 'tit-for-tat'
British govt sticks up for BP, spill looks worse
- Wall Street Journal:
BP Weighs Dividend Cut
- Times of London:
BP plans to defer dividend after pressure from Obama