BP's board members were due Monday to meet on their strategy on dividend payments as the company said that the cost of cleaning up the still-uncapped Gulf of Mexico oil spill has reached $1.6 billion.
According to reports, BP (BP 32.63, -1.34, -3.95%) (UK:BP. 369.85, -22.05, -5.63%) is weighing whether to halt or cut its second-quarter dividend payment or make the payment in shares, as it also considers a weekend request from the Obama administration to set up a separate escrow account to handle the spill costs.
BP said the $1.6 billion tab includes the cost of the spill response, containment, relief well drilling, grants to Gulf states, claims paid and federal costs. It again insisted it was too early to quantify the other potential costs and liabilities.
Credit Suisse has estimated the total bill could be $37 billion, and the hit to the company's market capitalization, through Friday's trade, was $83 billion.
BP shares slumped nearly 6% in midday London trade.
Over the weekend, Obama's senior adviser, David Axelrod, said the government wants BP to set up an independently managed escrow account to compensate those with damage claims. Axelrod said he wanted independent administration so that claims were not "slow-walked.""As a political compromise, we would expect BP to agree to this request," said Jonathan Jackson, head of equities at U.K. broker Killik & Co.
Obama is due to make a speech to the country on Tuesday and meet with BP's chairman, Carl-Henric Svanberg -- and likely BP CEO Tony Hayward -- on Wednesday.
Over the weekend, the president spoke by phone with British Prime Minister David Cameron amid worries in the U.K. that Obama was whipping up anti-British sentiment. Downing Street said Obama's "frustrations about the oil spill had nothing to do with national identity."
The U.S. president also made clear that "he had no interest in undermining BP's value," according to the Downing Street account. The odds on BP filing for bankruptcy however dropped to 4-to-1 from 10-to-1 at Irish bookie Paddy Power.
BP, meanwhile, has installed equipment to capture more oil spewing into the gulf.First operations are set to start around the end of June or early July, the company said.
The size of the spill is still being assessed, with estimates that as much as 40,000 barrels of oil a day have spilled into the Gulf.
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