By James Herron
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--BP PLC (BP) shares fell more than 10% Monday afternoon as U.S. politicians continued to pressure the company to set aside funds for clean-up and compensation related to the Gulf of Mexico oil spill.
Despite pressure from analysts and investors for BP to offer a concession to the U.S. authorities, perhaps by suspending or reducing the dividend, BP said its board is not expected to make an announcement on whether it will go ahead with its second quarter payout to shareholders after a meeting Monday.
At 1454 GMT, BP's shares were down 39 pence, or 9.9%, at 353 pence. London's blue-chip FTSE100 index was up 0.3%.
BP has been subject to immense political pressure as oil continues to spill from its well in the Gulf of Mexico.
White House officials Sunday said they wanted BP to put "substantial" funds into an escrow account to cover claims by Gulf Coast businesses and residents affected by the spill. And Senate Majority Leader Harry Reid (D, Nev.) and members of the Democratic caucus on Monday asked BP to set aside $20 billion in a special account to be used to pay for economic damages and clean-up costs of an ongoing oil spill in the Gulf Coast.
U.S. lawmakers also have demanded it suspend dividend payments until the crisis is over.
Analysts and investors have called for the company to ease tensions with the White House by at least temporarily suspending or reducing dividend payments. BP Chief Executive Tony Hayward told the Wall Street Journal last week that the board of directors could consider cutting or deferring the second-quarter dividend, but that decisions does not have to be made until July 27.
The company said Monday that it has spent $1.6 billion so far on containment, cleanup and compensation related to the spill. Analysts estimate the full cost of the spill at anywhere between $3 billion and $30 billion.
BP could also face civil penalties of up to $1,100 a barrel of oil spilled, rising to $4,300 a barrel if criminal negligence were to be proved. Based on the current spill estimate of 40,000 barrels a day, these penalties would total $2.3 billion to $9.1 billion.
Most analysts say BP will be able to meet these liabilities and continue to pay the dividend from a purely financial standpoint, but acknowledge that it may be necessary to reduce or briefly suspend dividend payments to assuage politicians in the U.S.
Hayward last week said BP could pay all or part of its dividend in "scrip," effectively an I.O.U. to shareholders. "We are considering all options on the dividend. But no decision has been made," Hayward said.
-By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317;
[email protected]
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary:
http://www.djnewsplus.com/access/al?rnd=OvC6ap13dLtLxvMItR8Lkw==. You can use this link on the day this article is published and the following day.
)