BP: No dividend to be paid this year

From left; BP Chairman Carl-Henric Svanberg, BP CEO Tony Hayward, BP Managing Director Bob Dudley, and BP America Inc. Chairman Lamar McKay, speak to the press outside the White House in Washingotn, Wednesday, June 16, 2010, following a meeting with President Barack Obama. (AP Photo/Manuel Balce Ceneta)

June 16, 2010 2:12:24 PM PDT
The chairman of BP's board said Wednesday that the oil company will suspend its quarterly dividend as part of its commitments to compensate victims of the Gulf oil spill. BP Chairman Carl-Henric Svanberg made the announcement Wednesday after emerging from the White House where he and other BP executives met for four hours with President Barack Obama. BP shares jumped as Svanberg spoke and were up 3.6 to $32.53 in afternoon trading in New York.

BP said in a statement that it has canceled a dividend payment -- totaling about $2.6 billion -- scheduled for June 21 and that it won't declare a dividend for the second and third quarters.

Svanberg also confirmed that the British oil giant has agreed to set aside an initial $20 billion to pay the victims of the oil spill in the Gulf of Mexico.

Obama and key members of Congress in recent weeks have pressed BP to suspend the dividend payment and give assurances that the company will meet its commitments to Gulf coast residents and businesses economically harmed by the spill.

BP said it will consider resuming dividend payments in 2011 when it issues results for the fourth quarter of this year.

Company officials also agreed to set aside an initial $20 billion to pay the victims of the oil spill in the Gulf of Mexico, calling it "an important step toward making the people of the Gulf Coast whole again."

Obama also announced that BP had voluntarily agreed to establish a $100 million fund to compensate laid-off oil right workers affected by his six-month drilling moratorium.