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BP Spill Costs Reach $2.35B, Shares Plummet
BP shares fell sharply in London Friday following the company's announcement that the cost of responding to the Gulf of Mexico oil leak has risen to $2.35 billion.
The share price dipped as low as 296.6 pence ($4.42) during morning trading, an 8.9 percent drop.
That took the shares well below half of the 655 pence price on April 20, the day an explosion killed 11 workers on the Deepwater Horizon drilling rig.
Special Section: Disaster in the Gulf
Analysts at Collins Stewart continued to recommend BP shares as a "buy" in a research note released Friday. The company earlier this month had lowered its target price for BP to 450 pence, noting that the investment was "not one for the faint-hearted."
Meanwhile, more dirty evidence of the massive oil spill washed ashore along the Gulf Coast for residents who don't need any more reminders of their frustration over failed efforts to stop the crude.
In Florida, officials on Thursday closed a quarter-mile stretch of Pensacola Beach not far from the Alabama line when thick pools of oil washed up, the first time a beach in the state has been shut because of the spill. A large patch of oil oozed into Mississippi Sound, the fertile waters between the barrier islands and mainland of a state that has mostly been spared.
The news came as a cap collecting oil from the well was back in place after a deep-sea robot bumped it and engineers concerned about escaping gas removed it for about 10 hours Wednesday.
Even before that latest setback, the government's worst-case estimates suggested the cap and other equipment were capturing less than half of the oil leaking from the seafloor. And in recent days, the "spillcam" video continued to show gas and oil billowing from the well.
BP's pronouncements that it would soon be able to collect more spewing oil have "absolutely no credibility," Jefferson Parish Councilman John Young said. The latest problem shows "they really are not up to the task and we have more bad news than we have good news."
The Human Toll of the Oil Spill
Mental Health Effects of BP Oil Spill
Gulf Coast Governors Leaving National Guard Idle
Gov't Says It's Complying with Moratorium Ruling
Improv Troupe's BP Spoof Video Goes Viral
BP officials said they sympathized and planned to do more.
"For BP, our intent is to restore the Gulf the way it was before it happened," BP PLC managing director Bob Dudley, who has taken over the company's spill operations, said in Washington.
In other developments:
• The federal judge who struck down the Obama administration's six-month ban on deep-water drilling in the Gulf refused to stay his ruling while the government appeals.
• Environmental groups asked the court to release additional information about U.S. District Judge Martin Feldman's holdings in oil-related stocks.
• Dudley said BP had asked James Lee Witt, director of the Federal Emergency Management Agency during the Clinton administration, to review its response to the oil spill and recommend improvements.
At nearly every important juncture since the Deepwater Horizon rig exploded, its effect on wildlife and the time frame for containing it have spectacularly missed the mark.
On June 8, BP chief operating office Doug Suttles said the spill should be reduced to a "relative trickle" in less than a week. BP later said it would take more time for the spill to reach a trickle.
President Barack Obama told the nation last week that as much as 90 percent would soon be captured, saying the company had informed him that was how much of the oil could be kept out of the water within weeks.
"It just doesn't look like that's in the cards," said Ed Overton, a retired professor of environmental science at Louisiana State University. "We're not even close to that, and the word today is that they were capturing less than the day before. I was hoping the president knew something that the rest of us didn't know. I mean, he was talking to the big shots."
BP said Thursday it was gradually ramping back up to capture about 700,000 gallons a day with the cap, and burning off an additional 438,000 a day using an incinerator ship. Worst-case government estimates are that about 2.5 million gallons are leaking from the well, though no one really knows for sure.
By mid- to late July, the company hopes to have the capacity to capture up to 3.3 million gallons a day, if that much is flowing, BP spokesman John Curry said.
It cannot all be done immediately, Curry said, because the logistics of positioning four giant ships capable of collecting oil and connecting them to the seafloor are complicated. "There's a limit to the number of ships in the world that do these type of things," he said.
None of those efforts is expected to stop the leak entirely. The soonest that would happen is late August, which is when BP says relief wells being drilled through thousands of feet of rock beneath the seabed will reach the gusher.
August seems a long way off to many.
Along Pensacola Beach, lifeguard Collin Cobia wore a red handkerchief over his nose and mouth to block the oil smell. "It's enough to knock you down," he said.
Others weren't happy about the situation but declined to second-guess the BP engineers.
"I have no clue at all about the correct way to stop it," said Rocky Ditcharo, a seafood dock owner in Louisiana's Plaquemines Parish. "'Powerless' - that's a good word for it."
© 2010 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. The share price dipped as low as 296.6 pence ($4.42) during morning trading, an 8.9 percent drop.
That took the shares well below half of the 655 pence price on April 20, the day an explosion killed 11 workers on the Deepwater Horizon drilling rig.
Special Section: Disaster in the Gulf
Analysts at Collins Stewart continued to recommend BP shares as a "buy" in a research note released Friday. The company earlier this month had lowered its target price for BP to 450 pence, noting that the investment was "not one for the faint-hearted."
Meanwhile, more dirty evidence of the massive oil spill washed ashore along the Gulf Coast for residents who don't need any more reminders of their frustration over failed efforts to stop the crude.
In Florida, officials on Thursday closed a quarter-mile stretch of Pensacola Beach not far from the Alabama line when thick pools of oil washed up, the first time a beach in the state has been shut because of the spill. A large patch of oil oozed into Mississippi Sound, the fertile waters between the barrier islands and mainland of a state that has mostly been spared.
The news came as a cap collecting oil from the well was back in place after a deep-sea robot bumped it and engineers concerned about escaping gas removed it for about 10 hours Wednesday.
Even before that latest setback, the government's worst-case estimates suggested the cap and other equipment were capturing less than half of the oil leaking from the seafloor. And in recent days, the "spillcam" video continued to show gas and oil billowing from the well.
BP's pronouncements that it would soon be able to collect more spewing oil have "absolutely no credibility," Jefferson Parish Councilman John Young said. The latest problem shows "they really are not up to the task and we have more bad news than we have good news."
The Human Toll of the Oil Spill
Mental Health Effects of BP Oil Spill
Gulf Coast Governors Leaving National Guard Idle
Gov't Says It's Complying with Moratorium Ruling
Improv Troupe's BP Spoof Video Goes Viral
BP officials said they sympathized and planned to do more.
"For BP, our intent is to restore the Gulf the way it was before it happened," BP PLC managing director Bob Dudley, who has taken over the company's spill operations, said in Washington.
In other developments:
• The federal judge who struck down the Obama administration's six-month ban on deep-water drilling in the Gulf refused to stay his ruling while the government appeals.
• Environmental groups asked the court to release additional information about U.S. District Judge Martin Feldman's holdings in oil-related stocks.
• Dudley said BP had asked James Lee Witt, director of the Federal Emergency Management Agency during the Clinton administration, to review its response to the oil spill and recommend improvements.
At nearly every important juncture since the Deepwater Horizon rig exploded, its effect on wildlife and the time frame for containing it have spectacularly missed the mark.
(CBS)
On June 8, BP chief operating office Doug Suttles said the spill should be reduced to a "relative trickle" in less than a week. BP later said it would take more time for the spill to reach a trickle.
President Barack Obama told the nation last week that as much as 90 percent would soon be captured, saying the company had informed him that was how much of the oil could be kept out of the water within weeks.
"It just doesn't look like that's in the cards," said Ed Overton, a retired professor of environmental science at Louisiana State University. "We're not even close to that, and the word today is that they were capturing less than the day before. I was hoping the president knew something that the rest of us didn't know. I mean, he was talking to the big shots."
BP said Thursday it was gradually ramping back up to capture about 700,000 gallons a day with the cap, and burning off an additional 438,000 a day using an incinerator ship. Worst-case government estimates are that about 2.5 million gallons are leaking from the well, though no one really knows for sure.
By mid- to late July, the company hopes to have the capacity to capture up to 3.3 million gallons a day, if that much is flowing, BP spokesman John Curry said.
It cannot all be done immediately, Curry said, because the logistics of positioning four giant ships capable of collecting oil and connecting them to the seafloor are complicated. "There's a limit to the number of ships in the world that do these type of things," he said.
None of those efforts is expected to stop the leak entirely. The soonest that would happen is late August, which is when BP says relief wells being drilled through thousands of feet of rock beneath the seabed will reach the gusher.
August seems a long way off to many.
Along Pensacola Beach, lifeguard Collin Cobia wore a red handkerchief over his nose and mouth to block the oil smell. "It's enough to knock you down," he said.
Others weren't happy about the situation but declined to second-guess the BP engineers.
"I have no clue at all about the correct way to stop it," said Rocky Ditcharo, a seafood dock owner in Louisiana's Plaquemines Parish. "'Powerless' - that's a good word for it."
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You seem to be against BP cleaning up their mess. What ever happened to the party of personal responsibility.
I think they are totally liable for their mess and are required to clean it up.
That being said, the executive branch of the Federal government has no power given to it by the States through the Constitution to make a company set aside $20B for the government to decide where to spend it.
That is Mafia style tactics....and unConstitutional.
Obey the law. EVERYONE!
Once BP's stock hits zero, the payments stop.
That is when I get on board BP.
Hey if it costs the whole company to clean up their mess then so be it.
I have studied the Constitution for over 25 years...and I have yet to find the enumerated power that authorizes that.
Nothing in the constitution says you can appoint a Czar for everything under the sun, either.
Community Planners hold no allegiance to the constitution.
Just wondering why any company would allow itself to be railroaded using mafia style tactics, when it is all illegal to do in the first place.
History lesson 101. Ross Perot drew votes away from Hubert Walker Bush 1 and threw the election to Bill Clinton in 1992 even though he did not win a plurality of votes with only forty-three percent of the votes cast. Ross Perot drew twenty percent of the votes and pulled votes mainly away from Bush senior.
Bill Clinton signed off on the British Petroleum takeover of Atlantic Richfield Arco in 2000. Clinton could have blocked the merger on antitrust grounds.
Democrats repeatedly argue that they support free competition and are against huge corporate mergers that eliminate good paying American based jobs.
After the merger with Arco (Atlantic Richfield), British Petroleum immediately closed down the Arco huge campus style research facility in Plano Texas and sold the facility to Perot Systems to be used as home corporate headquarters of Perot Systems.
It looks as Britsh Petroleum makes Rezko in Chicago look like a piker when it comes to making political paybacks.
Democrats enjoy your oil spill and your special relationship with British Petroleum BP.
Drill baby drill with American owned and American managed oil companies is the solution.
The Democrats must take responsibility for their company, British Petroleum.
---------------
These relief wells are being drilled at a surface a mile underwater, then through thousands of feet of rock. And BP is confident they can do that and exactly hit a seven-inch pipe. Lord, they have more confidence than I do.
If this is your line of business then shouldn't you be prepared for an emergency?
Bill Clinton loves everything British. He went to Oxford for more than a year during the Vietnam War and led protests against the war on British Streets. He loved liberal Labour leader Tony Blair?s policies during his own administration.
He also loved it when British Petroleum doubled it size by taking over two huge American owned and managed oil companies, Arco (Atlantic Richfield) and Amoco (Standard Oil of Indiana) during his administration.
Clinton should have easily blocked the takeovers on antitrust grounds but these companies traditionally supported the Republicans so this was political payback to let a foreign company British Petroleum to take over two American jewells of the oil industry.
Democrats would rather the domestic oil industry go out of business completely or be taken over by foreign companies rather than for it to continue to support Republicans only.
So now that British Petroleum has destroyed the Gulf do not pretend that British Petroleum is not a creation of Bill Clinton and the Democratic Party.
American owned oil companies have historically supported Republicans. Democrats hate the American owned oil companies so much they happily did not block under antitrust grounds the takeover of both Arco and Amoco by British Petroleum under Clinton.
Democrats would rather an American company become foreign owned or go out of business entirely rather than for that company to continue to support the Republican Party only.
If Arco was still around the spill would not have happened. Bill Clinton and the Democrats should take a bow and take credit for their spill and their company British Petroleum, BP. Arco once considered a jewell of the American oil industry is gone thanks to the Democrats.
If American owned oil companies enjoyed the support of both political parties maybe American owned Arco could have bought out British Petroleum and not the other way around. The Gulf oil spill would not have happened if Arco was drilling that well.
Democrats are suppose to be for free competition and against huge corporate mergers that eliminate good paying American based jobs.
After the merger with Arco (Atlantic Richfield), British Petroleum closed down Arco?s huge campus style research facility in Plano Texas and sold the facility to Perot Systems to be used as Perot?s home corporate headquarters.
Without Clinton?s antitrust approval of the Arco and Amoco mergers with British Petroleum, American owned Arco could have been the operator of the Gulf lease and the spill would not have happened.
Democrats enjoy your oil spill and your special relationship with British Petroleum BP.
Drill baby drill with American owned and American managed oil companies is the solution.
We seem to have a disfunctional relationship, Obama shakes BP down and the Repb from Texas apologizes.
The Repubs sypathized on the BP buy-out deal and on the BP (((Shake-down)))
Next week I would expect you to say the Dems invaded Iraq for oil.
The Clinton Administration should have blocked Britsh Petroleum?s takeover of Arco on antitrust grounds. It would have been a slam dunk. Arco controlled eighty percent of our Alaskan oil reserves and developed the North Slope. Arco created our Alaskan oil industry and controlled half of Prudhoe Bay production at the time of the BP takeover. British Petroleum had already swallowed up American owned Amoco (Standard Oil of Indiana) two years earlier.
In an already heavily concentrated industry, foreign owned BP acquisition of Arco on top of its Amoco acquisition was inherently anticompetitive in retail markets and vertically upsteam in production.
Between the Arco and Amoco acquisitions, British Petroleum nearly doubled its size without any antitrust scrutiny by the Clinton Administration.
Democrats must take responsibility for their company, British Petroleum.