Robert Dudley, the man charged with righting BP (BP), won’t sound a retreat. Despite the disastrous blowout in the Gulf of Mexico, BP will plunge even deeper into deepwater exploration. Dudley, who becomes the first American chief executive officer of the British oil giant on Oct. 1, will slim BP to its core strength: the high-risk, high-return search for oil and gas in demanding environments. That’s the same strategy that led to the Gulf spill and turned outgoing CEO Tony Hayward into a pariah. It remains alluring because it can generate large profits for companies that avoid calamity. “The key to this industry is replacing earnings, and BP thinks they know how to do that in deep water,” says J. Robinson West, chairman of consultant PFC Energy in Washington.
Dudley, 54, doesn’t have much choice but to make the company leaner. He needs cash to reassure financial markets of BP’s viability and to pay gigantic bills for the spill. Along with announcing Dudley’s new role, BP on July 27 took a $32.2 billion charge for estimated future spill costs. That led to a loss of $17.2 billion for the second quarter. To raise cash, Dudley surprised investors with plans to sell up to $30 billion in production assets—triple the level company executives in May said they would divest. BP’s oil and gas production will fall from 3.8 million barrels per day to about 3.5 million.