BP weighs dividend cut as US doubles oil leak estimate

BP said yesterday it is considering cutting its dividend payments, as US officials more than doubled the estimated size of the Gulf of Mexico oil leak soiling fragile shores.

"We are considering all options on the dividend. But no decision has been made," BP chief executive Tony Hayward told The Wall Street Journal.

The newspaper said BP's board may consider cutting or deferring its second-quarter dividend - due to be announced on July 27 - or even issuing dividend payments as scrip, effectively a means of delaying payment to shareholders.

President Barack Obama and US lawmakers have turned their sights on the BP dividend, a lucrative source of income for many US and British pension funds, even as the firm's shares slumps in the face of what is likely to be a multi-billion-dollar cleanup bill.

US criticism has centred on Mr Hayward, who Mr Obama suggested he would have fired if the executive were his employee. BP's chairman has been summoned to a White House meeting with Mr Obama next week.

Amid fears of an anti-British backlash in the United States over the spill, British Prime Minister David Cameron will discuss BP's handling of crisis with Mr Obama over the weekend.

Data suggesting the oil's flow could be upwards of 40,000 barrels a day - some 1.68 million gallons - rounded off a miserable day for BP on Thursday when its share price hit its lowest level since 1997.

Investors worry Mr Obama intends to exact a heavy price from the British energy giant as its potential liability soars and US officials look to suspend shareholder dividends until compensation is paid.

BP's share price has fallen more than 40 per cent - wiping tens of billions of dollars off its market value - since the Deepwater Horizon rig sank on April 22. But the share price rallied 6.85 per cent to 390.5 pence in early London trading yesterday in what one dealer called an "inevitable bounce" after the falls of recent days.

Marcia McNutt, who chairs the US government's flow rate assessment team, has doubled the previous official figures of between 12,000 and 19,000 barrels per day.

BP's first estimate was only 1,000 barrels per day and it stuck to a later estimate of 5,000 barrels a day even as that amount was being siphoned to the surface with more oil and natural gas still clearly gushing out.

A containment device fitted last week is now capturing 15,800 barrels a day, but the latest data suggests at least 4,200 barrels and possibly up to 25,000 barrels - more than a million gallons - are still spewing into the sea each day.

At least 40 million gallons - and perhaps even double that amount - of crude have already poured into the Gulf. That is roughly four times as much as the Exxon Valdez spill off the Alaskan coast in 1989. Coast Guard Admiral Thad Allen, who is leading the US government response to the crisis, summoned BP chairman Carl-Henric Svanberg and other company officials to a White House meeting next Wednesday. There was no word on whether Mr Hayward would participate.

"The potential devastation to the Gulf Coast, its economy and its people require relentless efforts to stop the leak and contain the damage," Admiral Allen said in a letter to Mr Svanberg.

Mr Obama, who heads to the Gulf next week for his fourth visit since the disaster, met Thursday at the White House with relatives of the 11 workers killed when the Deepwater Horizon rig exploded.

Earlier this week, US Interior Secretary Ken Salazar said the company's liability should include reimbursing all companies hit by a six-month moratorium on deep sea drilling.