BP and RIG
04-29-2010, 02:03 PM
#1
Team Owner
Thread Starter
BP and RIG
Is it too late to short these two? I'm thinking they could both be a buy once the well is capped.
04-29-2010, 04:07 PM
#2
Drifting
I'd pick up some BP call options, better way to benefit on an upswing, without loosing your shirt if there is a buy run, or short covering.
Instead of shorting, the other/maybe better way to play this might be to get some put options, that would be a good bet, based on if the Govt spanks them with a massive fine or reg that drops the stock further.
I'm not really a fan of shorting though, I think there are better/safer ways of taking a bearish position.
Instead of shorting, the other/maybe better way to play this might be to get some put options, that would be a good bet, based on if the Govt spanks them with a massive fine or reg that drops the stock further.
I'm not really a fan of shorting though, I think there are better/safer ways of taking a bearish position.
04-30-2010, 07:50 PM
#3
Moderator Alumnus
The $20 billion drop in BP's market capitalization since an oil spill in the Gulf of Mexico last week is disproportionate, several analysts argued Friday, as it currently puts the cost of the incident to the U.K. oil firm at several times that of the Valdez to Exxon Mobil.
Citigroup analyst Mark Fletcher called the 11% drop in the BP share price since the April 22 rig fire off the cost of Louisiana "unwarranted," especially in the wake of "impressive" first-quarter results. He reiterated his price target of 730 pence, or about $67.14 per U.S. share.
BP has disclosed that it's spending $6 million a day on controlling the well and containing the spillage, which has now reached the Louisiana shore. Oil continues to leak at a possible estimate of around 5000 barrels a day.
Fletcher said that the drilling of a relief well, to intercept the Macondo exploration well, at a cost of $150 million, now seems likely. He estimated that the incident could eventually cost BP around $450 million net, or roughly 2% of this year's earnings.
"Reaction to operational incidents are generally overdone and present an opportunity to outperform," Fletcher said, reminding investors that in the six months after the Texas City refinery fire in 2005, BP outperformed both the market and the sector, recovering by 19%. In the same way, rival Exxon Mobil Group (XOM 67.90, +0.13, +0.19%) managed to outperform for the six months after the Valdez spillage in 1989.
Dominique Patry at the French broker Cheuvreux, however, said the potential cost of the incident to BP could reach well beyond $450 million. Patry noted that in the Valdez case, Exxon spent the equivalent of $4.1 billion to clean up Alaskan shores, and though costs could be lower for BP as the oil is lighter, there can be no certainty that it wouldn't rise to near that level.
In addition, Patry stressed that as the oil is going to land in a highly sensitive area where a lot of economic activity takes place, notably fishing and tourism, the main uncertainty in assessing the eventual cost of the incident relates to the lawsuits likely to emerge from the various parties, and warned that potential claims could be "significant."
Still, Goldman Sachs analysts said it would take 52 days of uninterrupted spill at 5,000 barrels a day for the BP incident to reach the same size as the Valdez one and cost as much.
The broker noted that the recent drop in the BP share price suggests the market assumes $14 billion of damages, or almost six times the cost to Exxon of the Valdez spill.
"We believe the reaction is overrated and reiterate our buy rating on BP," Goldman said.
At Bank of America Merrill Lynch, analysts on Friday also said the price reaction was overdone, stressing that that even if the clean up ends up lasting six months and including the cost of relief wells, total clean-up costs would still be somewhere around $2 billion. Throwing in civil damages similar to that of the Valdez, BP's net costs for would only approach $3 billion, or just over half of first-quarter earnings.
"While the market may not be willing to assume such a scenario, given ongoing uncertainty, it, nevertheless, underscores that the hit on BP's shares looks overdone," the broker concluded.
http://www.marketwatch.com/story/bp-...say-2010-04-30
Citigroup analyst Mark Fletcher called the 11% drop in the BP share price since the April 22 rig fire off the cost of Louisiana "unwarranted," especially in the wake of "impressive" first-quarter results. He reiterated his price target of 730 pence, or about $67.14 per U.S. share.
BP has disclosed that it's spending $6 million a day on controlling the well and containing the spillage, which has now reached the Louisiana shore. Oil continues to leak at a possible estimate of around 5000 barrels a day.
Fletcher said that the drilling of a relief well, to intercept the Macondo exploration well, at a cost of $150 million, now seems likely. He estimated that the incident could eventually cost BP around $450 million net, or roughly 2% of this year's earnings.
"Reaction to operational incidents are generally overdone and present an opportunity to outperform," Fletcher said, reminding investors that in the six months after the Texas City refinery fire in 2005, BP outperformed both the market and the sector, recovering by 19%. In the same way, rival Exxon Mobil Group (XOM 67.90, +0.13, +0.19%) managed to outperform for the six months after the Valdez spillage in 1989.
Dominique Patry at the French broker Cheuvreux, however, said the potential cost of the incident to BP could reach well beyond $450 million. Patry noted that in the Valdez case, Exxon spent the equivalent of $4.1 billion to clean up Alaskan shores, and though costs could be lower for BP as the oil is lighter, there can be no certainty that it wouldn't rise to near that level.
In addition, Patry stressed that as the oil is going to land in a highly sensitive area where a lot of economic activity takes place, notably fishing and tourism, the main uncertainty in assessing the eventual cost of the incident relates to the lawsuits likely to emerge from the various parties, and warned that potential claims could be "significant."
Still, Goldman Sachs analysts said it would take 52 days of uninterrupted spill at 5,000 barrels a day for the BP incident to reach the same size as the Valdez one and cost as much.
The broker noted that the recent drop in the BP share price suggests the market assumes $14 billion of damages, or almost six times the cost to Exxon of the Valdez spill.
"We believe the reaction is overrated and reiterate our buy rating on BP," Goldman said.
At Bank of America Merrill Lynch, analysts on Friday also said the price reaction was overdone, stressing that that even if the clean up ends up lasting six months and including the cost of relief wells, total clean-up costs would still be somewhere around $2 billion. Throwing in civil damages similar to that of the Valdez, BP's net costs for would only approach $3 billion, or just over half of first-quarter earnings.
"While the market may not be willing to assume such a scenario, given ongoing uncertainty, it, nevertheless, underscores that the hit on BP's shares looks overdone," the broker concluded.
http://www.marketwatch.com/story/bp-...say-2010-04-30
06-03-2010, 04:40 PM
#4
Moderator Alumnus
Despite the sharp fall in BP's share price following the company's inability to cap a leaking well in the Gulf of Mexico, most analysts say the selloff is overdone.
BP shares sank nearly 15% Tuesday after the company's latest attempt to seal the leaking Gulf oil well failed over the weekend. The selloff accelerated just before the closing bell, when U.S. Attorney General Eric Holder announced a criminal probe into the spill.
Since the accident happened April 20, which resulted in 11 deaths and an oil leak of up to 19,000 barrels per day, BP shares have fallen nearly 40%, wiping out nearly $70 billion in shareholder value. Before the accident the company had a market capitalization of nearly $183 billion. Now it's just below $115 billion.
Investors are concerned the clean up costs, lawsuits, and added restrictions from the spill, the worst in U.S. history, will sap BP's earnings potential.
Plus, like most big oil projects, BP is self-insured for the operation, so all of the costs of the cleanup and damages will fall on its shoulders.
No one knows how much the spill will eventually cost BP. Estimates have ranged from $3 billion to $25 billion - many fall somewhere in the middle. As of Tuesday BP said it has spent just shy of $1 billion on the accident.
But whatever the price tag, it will likely be paid out over a period of years. For a company that made nearly $17 billion in profit last year and is expected to top $20 billion this year, most analysts say the stock hit is unjustified.
"They've got a balance sheet you could slap $20 billion of debt on and not miss a beat," said Mark Gilman, an oil and gas analyst with the Benchmark Co., a boutique broker-dealer. "We think the financial hit has been excessive."
Indeed, so do the majority of analysts.
In England, where BP (BP) is based, 38 analysts have a buy rating on the stock and eight have it as a hold. Only three recommend selling it, said Douglas Youngson, an oil analyst at Arbuthnot Securities, a London-based investment bank.
http://money.cnn.com/2010/06/01/news...s/BP_analysts/
BP shares sank nearly 15% Tuesday after the company's latest attempt to seal the leaking Gulf oil well failed over the weekend. The selloff accelerated just before the closing bell, when U.S. Attorney General Eric Holder announced a criminal probe into the spill.
Since the accident happened April 20, which resulted in 11 deaths and an oil leak of up to 19,000 barrels per day, BP shares have fallen nearly 40%, wiping out nearly $70 billion in shareholder value. Before the accident the company had a market capitalization of nearly $183 billion. Now it's just below $115 billion.
Investors are concerned the clean up costs, lawsuits, and added restrictions from the spill, the worst in U.S. history, will sap BP's earnings potential.
Plus, like most big oil projects, BP is self-insured for the operation, so all of the costs of the cleanup and damages will fall on its shoulders.
No one knows how much the spill will eventually cost BP. Estimates have ranged from $3 billion to $25 billion - many fall somewhere in the middle. As of Tuesday BP said it has spent just shy of $1 billion on the accident.
But whatever the price tag, it will likely be paid out over a period of years. For a company that made nearly $17 billion in profit last year and is expected to top $20 billion this year, most analysts say the stock hit is unjustified.
"They've got a balance sheet you could slap $20 billion of debt on and not miss a beat," said Mark Gilman, an oil and gas analyst with the Benchmark Co., a boutique broker-dealer. "We think the financial hit has been excessive."
Indeed, so do the majority of analysts.
In England, where BP (BP) is based, 38 analysts have a buy rating on the stock and eight have it as a hold. Only three recommend selling it, said Douglas Youngson, an oil analyst at Arbuthnot Securities, a London-based investment bank.
http://money.cnn.com/2010/06/01/news...s/BP_analysts/
06-09-2010, 02:27 PM
#5
Team Owner
Thread Starter
Ok, I made some money, can we stop the drop to 0 so that they can pay for this damn mess? Why do I feel that we are going to end up paying for the majority of this?
06-09-2010, 02:36 PM
#6
My Garage
"Hey let's bankrupt BP so much that they can't pay for it and the government has to take over and use tax money to fund the cleanup"
Great idea people.
06-18-2010, 08:01 AM
#7
Team Owner
Thread Starter
http://money.cnn.com/2010/06/18/news...ce=yahoo_quote
Moody's Investors Service cut BP's long-term rating by three notches Friday, marking the second downgrade in a month, citing the worsening impact of the oil disaster.
Moody's cut BP's senior unsecured ratings and long-term debt securities to Aa2 from A2 and said there could be further downgrades as it continues to review BP's ratings.
Moody's cut BP's senior unsecured ratings and long-term debt securities to Aa2 from A2 and said there could be further downgrades as it continues to review BP's ratings.
Trending Topics
06-18-2010, 12:14 PM
#8
Team Owner
Thread Starter
BP tries to raise cash as it struggles to plug well
http://news.yahoo.com/s/nm/20100618/ts_nm/us_oil_spill
http://news.yahoo.com/s/nm/20100618/ts_nm/us_oil_spill
BP Plc was seeking $7 billion in loans from banks on Friday, trying to raise more cash as it struggled to plug its gushing Gulf of Mexico well and contain the worst oil spill in U.S. history.
A senior London-based banker told Reuters that the British energy giant was seeking $1 billion in loans from seven banks.
A senior London-based banker told Reuters that the British energy giant was seeking $1 billion in loans from seven banks.
06-29-2010, 09:35 PM
#9
Suzuka Master
My uncle was telling me that BP looks like a good stock to buy right now. What do you guys think? BP is at 26.xx right now and a couple months ago they were pretty much double that. I have a feeling they will be able to fix the well and bounce back from this. Only if I had money. 
06-30-2010, 08:10 AM
#10
Team Owner
Thread Starter
There are plenty of good stocks that have been taken to the woodshed in the past week or two. There is easier money to be made elsewhere.
MSFT is a buy at $23 and change IMO.
MSFT is a buy at $23 and change IMO.
07-12-2010, 07:35 PM
#11
Team Owner
Thread Starter
Congrats to you if you bought BP then. I got that one wrong.
07-13-2010, 11:31 AM
#13
Team Owner
Thread Starter
Long term they will probably be okay. Will it be sell on news or buy buy buy when they get the well under control? 
Thread
Thread Starter
Forum
Replies
Last Post
rockyboy
Car Talk
4
09-21-2015 12:36 PM
2015TLX
5G TLX (2015-2020)
1
09-11-2015 02:56 PM
