Hayward also should be concerned about potential pitfalls at Glencore, says Karina Litvack of F&C Asset Management in London.
“The company faces a challenge in gaining the trust of the outside world in terms of its governance and sustainability record,” Litvack says, because Vallares and Glencore are both looking for investments in the same sector.
Link to Glencore
In addition, Rothschild is a major Glencore bondholder as well as a friend of Glencore chief executive Ivan Glasenberg. “Nat Rothschild is friendly with half the world,” Hayward says with a chuckle. “If there ever was a conflict, I would recuse myself, obviously.” Rothschild declined requests for an interview.
Hayward, the eldest of seven children, was born in Slough, an industrial town west of London. His father was a mid-level manager in a textile mill; his mother, an administrator at Britain’s National Health Service. His undergraduate degree is from Aston University in Birmingham.
Hayward’s big break at BP came in 1990, when John Browne, the company’s head of exploration and production and later its chief executive, tapped him to be a Turtle — a name derived from the cartoon “Teenage Mutant Ninja Turtles.” Selected in pairs each year, the Turtles served as Browne’s aides-de-camp, standing at his elbow as he negotiated multibillion-dollar deals as well as making sure that his office was stocked with El Rey del Mundo Cuban cigars and bottles of Montrachet.
Hayward was steadily promoted, becoming chief of BP’s exploration and production division, the company’s main profit driver, in 2003. In 2007, when Browne resigned after becoming embroiled in a scandal involving his personal life, the board unanimously chose Hayward to replace him.
Browne had concentrated on megamergers and branding BP with his “beyond petroleum” campaign. Toward the end of his tenure, though, BP was plagued by costly project delays and safety and maintenance flaws. A blast in 2005 at BP’s refinery in Texas killed 15 people and injured more than 170.
In 2006, BP was forced to stop pumping oil from its Prudhoe Bay field in Alaska after oil leaked from a corroded pipeline.
Hayward closed the office Browne had opened for BP’s renewable-energy division and pushed BP into Canadian oil sands. He fired 6,500 workers. He wanted to improve BP’s safety record and strive for operational excellence.
BP’s share price on the London Stock Exchange rebounded 16 percent from the time Hayward became chief executive through April 20, 2010 — the day the Deepwater Horizon exploded.
‘Hit by a bus’
The disaster thrust Hayward into a role for which he was ill-prepared, according to a friend who also worked at BP. Hayward was uncomfortable speaking before crowds and on camera, says the friend, who asked not to be named. Hayward was philosophical about the disaster.
“Sometimes you step off the pavement and get hit by a bus,” he told reporters while announcing his resignation.
Whether Vallares is a success will depend on which company it acquires. Oil fields have been garnering sky-high prices as national oil companies from China, India and Russia expand. In October 2010, China Petroleum & Chemical, known as Sinopec, purchased 40 percent of the Brazilian arm of Spanish oil company Repsol YPF for $7.1 billion — more than $2 billion above analysts’ consensus estimate of the stake’s value.
The ghost of Macondo still dogs Hayward. He’s a defendant in two consolidated class-action lawsuits in the United States resulting from Macondo, which could cost BP $6 billion, according to a Citigroup estimate.
Yet the demand for experienced oil and gas hands is such that reincarnation is always possible. Win or lose with Vallares, Hayward is likely to have plenty more chances to get his life back.
The full version of this Bloomberg Markets story is in the October issue.