BP Chief Executive Tony Hayward will step down within the next 10 weeks, the Times newspaper reported, as the company battles to remain independent after the worst oil spill in U.S. history.
A BP spokesman told Reuters that Hayward had the full support of the board and would stay in office.
Hayward has been criticized for a series of PR gaffes and a failure to quickly stem the leak in the Gulf of Mexico, prompting speculation he would be removed.
Hayward would have to step down so that BP could shore up its defenses against a potential buyout threat by ExxonMobil or Royal Dutch Shell, the Times cited a person close to the matter as saying.
Citing sources close to the company, The Times said there was a growing expectation that Hayward would announce his departure in late August or September.
Robert Dudley, chief of BP's Gulf Coast restoration efforts, is viewed as the front-runner to replace Hayward, The Times said.
BP is also selling assets around the world to help shore up its finances after pledging to set aside $20 billion to meet the costs of the spill.
The company said on Tuesday it reached a $7 billion deal with Apache Corp, a large part of its planned sale of $10 billion in assets.
BP said Apache would pay a $5 billion cash deposit on July 30 as part of the deal for exploration and production facilities in North America and Egypt. The company said the deal would include assets in New Mexico, natural gas in western Canada and concessions in Egypt.
Earlier, it announced it would sell $1.7 billion worth of assets in Vietnam and Pakistan.
BP's share price ended 1.5 percent lower in New York at $35.20.
The continuing disaster in the Gulf remains high on the American and British political agendas and dominated a visit to Washington by British Prime Minister David Cameron.
Cameron praised BP for steps it has taken to plug the leak and pay for damages suffered by Gulf residents. U.S. officials on Tuesday gave BP's latest effort, a cap that has stopped the flow, another 24 hours for pressure tests on the seal.
The Gulf's tourism and fishing industries have been devastated by the millions of gallons of oil that have hit coastal beaches and marshes. The spill also has hurt President Barack Obama's approval ratings.
About 1.6 million barrels of oil remain in the Gulf, Louisiana Governor Bobby Jindal said, citing U.S. government data. [nN20103248]
Rig operator Ensco Plc filed a lawsuit on Tuesday challenging the Obama administration's new deepwater oil drilling moratorium, saying it was mostly the same as the first ban that a U.S. court already put on hold.
The BP asset sales were announced exactly three months after an explosion on an offshore rig killed 11 workers and caused the crude to flow into the Gulf of Mexico.
BP, which said on Monday it had spent about $3.95 billion so far on the oil spill, agreed under intense U.S. pressure from last month to set up an independently administered $20 billion escrow fund for damage claims. The Obama administration has stressed that is not a cap on the company's liabilities.
During a visit with Obama, Cameron said he understood U.S. anger at BP because of the oil spill. He also said it was important to both the U.S. and British economies that the company stay strong and stable.
TEST TO CONTINUE; STATIC KILL?
The U.S. government on Tuesday approved another 24-hour extension of a pressure test of the well. The broken well was capped last week -- at least temporarily -- after spilling up to 60,000 barrels a day of crude for three months.
The well test, which has been extended in 24-hour increments by the U.S. government, will continue until Wednesday afternoon and then be re-evaluated.
Scientists are now weighing another option -- a static kill to help smother and plug the leak.
The top U.S. oil spill official, retired Coast Guard Admiral Thad Allen, said BP could have a plan to proceed with the static kill option within 24 hours. This would involve pumping heavy drilling mud and possibly cement into the well, much like BP's failed top kill in May.
Kent Wells, BP's senior vice president of exploration and production, said the static kill would be different because the well is no longer spewing oil, thanks to the sealed cap. During the top kill effort, drilling mud pumped into the blowout preventer shot out of an uncovered pipe at the top along with leaking crude.
Such containment efforts are keenly eyed by investors as BP's ultimate costs from the spill may hinge on how much oil is determined to have been spilled into the Gulf.
Louisiana residents remain cautiously optimistic about the seal that has stopped the flow for now, but concerns remain.
I am happy it's stopped the flow, said New Orleans resident Barbara McGuinness. But do I worry about this thing blowing? Yes. We don't need any more bad news.
(Additional reporting by Rachelle Younglai in New Orleans, Doina Chiacu and Tabassum Zakaria in Washington, Matthew Lynley in New York, Kristen Hays and Chris Baltimore in Houston; Writing by Ed Stoddard, Deborah Charles and Sitaraman Shankar; Editing by Bill Trott and Sanjeev Miglani)