BP market losses hit $100 billion on spill cost fears

Discussion in 'Wall St. News' started by S2007S, Jun 25, 2010.

  1. S2007S


    Thought it was interesting to see the amount of people and equipment they are using to fix this mess, the costs of running this has to be in the tens of millions of dollars each day.

    Even if these 37,000 people were getting paid minimum wage at $7-$8 its still costing them around $2 million + a day and we all know they aren't paying these guys minimum wage so the costs of just these 37,000 alone has to be between 5-10 million a day, add that to the 4500 vessels and 100 aircraft and the numbers go sky high.

    BP said 37,000 people, 4,500 vessels and 100 aircraft were currently helping the response effort.

    BP market losses hit $100 billion on spill cost fears

    On Friday June 25, 2010, 8:34 am EDT

    By Tom Bergin and Ernest Scheyder

    LONDON/VENICE, Louisiana (Reuters) - BP Plc stock hit a 14-year low on Friday and its credit weakened sharply on talk it needs extra cash to fund the clean-up and compensation bill for the worst oil spill in U.S. history.

    Total share losses for the embattled oil major since the ecological disaster began on April 20 stand at around $100 billion, more than halving its pre-spill market value, and analysts at Nomura said it needed to assure the market of its liquidity.

    "A heavy inversion of both credit yield and equity volatility suggests the market is concerned about a near-term credit event around BP," they said in a note.

    "With debt expensive and asset sales taking time, we consider that equity-linked financing -- perhaps backed by Sovereign Wealth -- could prove the attractive short-term solution," they added.

    A spokesman for BP -- whose chief executive, Tony Hayward, is currently on a UK investor roadshow -- said it had "considerable firepower" to meet the costs and denied market talk that the company was seeking bankruptcy protection.

    BP's London shares, which earlier hit a low of 296 pence a share, pared losses slightly but were still down 5.2 percent at 308.3 pence by 1154 GMT (7:54 a.m. ET), while five-year credit default swaps were 40 basis points wider at 575, according to Markit. The 2015 3.875-percent U.S. dollar bond widened 16.9 basis points to 529, according to Tradeweb.

    The firm's American Depositary Receipts were down 4 percent ahead of the U.S. open a day after stock exchange data showed the short interest in BP rose 290 percent in early June.

    To date, clean-up and compensation costs for the ecological disaster, which has devastated the region, hit President Barack Obama's poll ratings and led to a contested ban on deepwater drilling, were $2.35 billion, BP said.

    As concern grows that bad weather could hamper clean-up operations, it said a relief well had successfully detected the MC252 well and would continue to a target intercept depth of 18,000 feet, when "kill" operations would begin.

    BP said 37,000 people, 4,500 vessels and 100 aircraft were currently helping the response effort.


    The Obama administration was pursuing its legal options after a setback on Thursday when a judge refused to put on hold his decision lifting a ban on deepwater oil drilling imposed in response to the spill.

    After striking down the moratorium on Tuesday, a federal judge in New Orleans rejected a request to allow the six-month ban to stand while the government appeals his decision.

    Judge Martin Feldman issued an order denying the stay. The government has appealed to the U.S. Court of Appeals for the Fifth Circuit and can ask it to stay Feldman's decision.

    The government imposed the moratorium after BP's well ruptured on April 20, unleashing millions of gallons of crude into the sea and killing 11 workers.

    More generally, investors are concerned about the ultimate costs to BP as it faces more than 200 spill-related lawsuits and has agreed under political pressure to set up a $20-billion fund to pay damages to oil spill victims.

    BP was forging ahead with its efforts to capture or burn off oil as it gushes from the well on the bottom of the sea.


    Bad weather is brewing in the region and could hamper the clean-up efforts.

    A tropical wave over the western Caribbean Sea has a high chance of developing into a tropical depression over the next couple of days, the U.S. National Hurricane Center and other weather forecasters said.

    Most weather models see it hitting the coast near the Texas/Mexico border in a few days but some expect the wave to turn northeast toward Florida and the eastern Gulf of Mexico near where BP's clean-up operations are in high gear.

    Any slowdown in clean-up efforts would heap more pressure on President Obama, who has faced criticism and falling poll ratings because of perceptions that his handling of the crisis has been slow.

    "Obama better get off his ass and get something done," Billy Nungesser, president of Plaquemines Parish (county), told Reuters at a shrimp boil in Venice, a Louisiana fishing hub.

    "He still has a chance to save this coast and his presidency," he said.
  2. 1) Yummy! :D
    2) Double yummy! :eek:
  3. All these local Republicans are now worried about the coast and Obama's presidency?
    Aren't they the Republicans who are opposed to the temporary ban on deep water drilling?

    The strategic mistake that BP made was not spending a few billion $ on greasing congress and the executive branch. If BP had spread their oily wealth on congress as the financial sector had lavished on congress, BP would now be receiving a bailout instead of paying for a clean up.