INVESTORS in BP are having to get used to Hayward-o-grams. Tony Hayward, the new chief executive of the oil group, sent shockwaves through the FTSE’s largest company this week by suggesting that upcoming financial results would be “dreadful.”

It is reminiscent of his comments last December when, just before the unedifying and sudden departure of his predecessor, Mr Hayward appeared to criticise the BP leadership style. It is only fair to point out that Mr Hayward tried to squash the presumption that he was criticising Lord Browne of Madingley, who was then his boss, personally. It is also important to place his “dreadful” comment in context. Mr Hayward is surely aware of his obligation to make share price-sensitive forecasts available to all investors simultaneously. Some observers will believe that the comment represents a damning indictment of BP’s financial and operational prospects. But it may have been little more than a throwaway line, a general expression of concern rather than a particular prediction.


One way or another, however, this new Hayward-o-gram provides a timely reason to revisit BP’s investment judgment. It had gone rather quiet. Admittedly, the global credit crunch consumed attention over the summer. But given the tumult that engulfed BP late last year and early this year, the calm was more eerie than contented. Not only was the BP board stretched to breaking point, but the company also had deep operational problems to contend with. An explosion at its Texas City refinery in 2005 killed 15 and injured 170. Corrosion of Alaskan pipelines raised the spectre of environmental disaster – and an expensive round of repairs. Investigations conducted by the US Congress raised the danger of sanctions against the company and searching questions have been asked about its Russian ambitions – especially in light of some increasingly muscular, nationalistic, Moscow politics.

The price of oil adds to the intrigue. Four years ago you could buy a barrel of the black stuff for $25. It trebled in price in the next 36 months, then fell from $75 to $50, only to climb above $80 this year. Oil price volatility is a headache because it makes BP’s exploration investment decisions more risky. But by and large the upwardly mobile oil price has helped, and masked, BP’s disconcerting company-specific problems.