BP seeks to reassure investors over oil spill cost-report

* Cost of clean-up about $3 bln over 6 months – report

* BP insider says figure rough estimate for ongoing costs

* BP has no plans to axe dividend – report

LONDON, June 1 (BestGrowthStock) – BP (BP.L: ) will seek to patch up
its battered share price by reassuring investors the cost of
cleaning up the oil spill in the Gulf of Mexico is manageable
and will not affect dividends, British media reported on

The oil major’s Chief Executive Tony Hayward will tell
investors in a call this week the cost of the clean up — that
has so far spiralled to nearly $1 billion — can be easily
absorbed by cash generated from its operations around the
world, the Daily Mail said.

BP’s failure to stop the oil spill prompted a plunge in the
company’s share price on Tuesday and the Obama administration
said it opened a criminal investigation. [ID:nN01115402]

“If our current efforts were to fail and we have to wait
for the relief wells to be drilled and had six months of
clean-up, we estimate the cost at $3 billion,” Hayward told the
Daily Mail.

He added this cost must be considered in view of the oil
major’s “very strong operational performance generally which
will result in free cash flows of $7.5 billion to $8 billion,”
the paper said.

However a source at BP who asked not to be identified said
the figure was a rough estimate for ongoing clean up costs,
extrapolated from the latest cost update of $990 million, less
$40 million for compensation claims, and did not reflect an
estimate of total costs.

“No one knows what the total cost is going to be,” the
source said.

Gordon Gray at Collins Stewart said last week in a research
note that clean up costs could be $2 billion this year for BP
which carries 65 percent of the total bill as this is its share
of the block. Anadarko owns 25 percent and Mitsui 10 percent.

Compensation for damages to people in the Gulf including
fishermen and those involved in tourism will likely total
another $10 billion, Peter Hitchens, oil analyst at brokers
Panmure Gordon said on Tuesday.

Separately the Times newspaper reported Hayward will seek
to reassure investors — who saw $23 billion wiped off the
company’s share price on Tuesday — that BP has no plans to cut
its dividend, citing sources close to the company.

BP shares have lost more than a third of their value, or
about 46 billion pounds ($67 billion), since the leak started.
The cost of dealing with the crisis now totals $990 million,
and is rising.

Stock Analysis

(Reporting by Caroline Copley and Tom Bergin; Editing by
Dhara Ranasinghe)

BP seeks to reassure investors over oil spill cost-report