By Tom Bergin
LONDON (Reuters) - BP <:BP.LO:>Plc is expected to install an American known for diplomacy as chief executive, replacing Tony Hayward who has come under fire for his gaffe-prone handling of the worst oil spill in U.S. history.
Bob Dudley, the U.S. executive managing the response operation to the spill in the Gulf of Mexico, is poised to get the top job in the next 24 hours, a move that could soften U.S. criticism of the British oil major, sources close to the company say.
Hayward has described Dudley as BP's "Secretary of State" for his role overseeing the cleanup efforts. Dudley was previously head of BP's Russian joint venture, TNK-BP. Sky News reported Hayward would be offered a position with TNK-BP.
Investors cheered Hayward's expected departure, sending BP shares up 4 percent in London and New York even though the company is widely expected to report billions of dollars in losses on Tuesday when it releases quarterly results.
BP has lost 40 percent of its market capitalization since the April 20 blast that killed 11 and started a spill that has devastated fragile ecosystems and communities along the U.S. Gulf Coast. The BP spill has affected about 637 miles of the Gulf Coast shoreline -- about 39 percent of the coast that stretches from Brownsville, Texas, to the Florida Keys.
Analysts said Hayward's exit was a positive for the stock because he had become an easy target for angry U.S. lawmakers and Gulf residents. Hayward, a 53-year-old geologist, was pilloried in the United States for complaining he wanted his "life back" weeks after the Deepwater Horizon offshore rig explosion.
"It is customary that when things don't go right, you are going to chop heads and usually that starts at the top," said Steve Goldman, a market strategist with money manager Weeden & Co in Greenwich, Connecticut.
BP on Monday dropped its previous insistence that Hayward remained chief executive officer with the full support of the company's board and management. Sources said BP's board, meeting in London on Monday evening, would discuss a plan for Hayward's departure.
"BP notes the press speculation over the weekend regarding potential changes to management and the charge for the costs of the Gulf of Mexico oil spill. BP confirms that no final decision has been made on these matters," it said.
BP's work to permanently plug the gushing well got back on track after a storm passed through the Gulf. The rig that has been drilling a relief well to plug the leak was back on site and reconnecting equipment to resume work.
More than five million barrels of oil have spilled into the Gulf, according to government estimates, hitting the coastlines of all Gulf states and killing or injuring countless sea creatures and coastal birds.
Once the last bit of pipe is cemented in place near the bottom of the relief well this week, BP will begin a "static kill" in the first week of August, according to the head of the U.S. spill response, Thad Allen.
That entails pumping heavy drilling mud and cement into the well from the top to seal it off once and for all.
FINANCIAL RESULTS PENDING
Even if Hayward steps down as CEO, he may not escape another round of testimony before Congress. U.S. Senator Robert Menendez said he wants Hayward to testify on whether BP influenced the release of the convicted Lockerbie bomber to further the company's business interests.
"Tony Hayward, regardless of his status whether he is going to be the CEO tomorrow or not, we believe that he was in the midst of the negotiations with the Libyans as it related to this oil deal," Menendez, a Democrat, told a news conference in New York.
BP's boardroom drama unfolds as the company prepares to report an eye-popping second-quarter loss on Tuesday as it accounts for the financial impact of the environmental catastrophe, which at its worst has lopped $100 billion from BP's market value.
Dougie Youngson, an analyst with Arbuthnot, said he expected BP to write down $20 billion in clean-up costs this quarter "in order to give the new CEO a fighting chance." That would mean a loss in the order of $15 billion for the quarter, he wrote in a research note maintaining his "sell" rating.
Analysts at Barclays bank said BP could report a loss for the second quarter of $13 billion as it makes provisions of up to $25 billion for the cost of the spill. Those figures would far exceed an expected 77 percent jump in underlying profit.
If Hayward goes, he will be the third of the last four BP chief executives forced into an early exit. John Browne left after lying in court papers about a gay love affair, and Bob Horton was pushed out over strategic disagreements in 1992.
Dudley, who was raised in Mississippi, would be the first non-Briton to become CEO of BP. He was previously head of BP's Russian joint venture, TNK-BP, until he was forced to flee the country amid a spat between BP and its oligarch partners.
Under BP's terms of employment, Hayward would be entitled to one year's salary, or 1.045 million pounds ($1.6 million), and he could be in line for additional payouts under the company's incentive scheme, which awards shares options.
Hayward would also keep his pension entitlements, which were worth 10.8 million pounds at the end of last year.
(Additional reporting by Kristen Hays in Houston, Angela Moon and Daniel Trotta in New York, and Dominic Lau in London; Writing by Michael Shields and Emily Kaiser; editing by Vicki Allen)
