Now that a clearer picture of the liabilities concerning the BP (NYSE:BP) oil crisis has emerged, and things are beginning to settle down for the oil giant, raising capital through bonds has revealed the markets like what they see for the future of the company, and have been snapping up the two bond offerings of the company over the last week.
With bankruptcy appearing to be a non-event going forward, a lot of positive sentiment from the market is now lingering over the company.
This is a global phenomenon, as measured by who has invested in the bonds, as they're from all parts of the world. The $6 billion invested in the bonds sends a clarion consensus that the market believes BP will remain solvent.
It wasn't just that though, as the bonds were highly oversubscribed, suggesting there's a lot of confidence in the future of BP by investors.
In the first offering of $3.5 billion last week, approximately $12 billion in orders were made, giving an idea of the demand for BP debt. On Monday the sale of bonds generated over four times oversubscription.
The conclusion being made by the actions of the market are while the liabilities of BP are enormous, they're more than big enough to pay for them.
One remaining huge factor for BP is whether or not they're designated as grossly negligent concerning the oil spill. If they aren't, at most they would pay a fine of about $4.5 billion. If they are found grossly negligent, that would soar to $17.5 billion. They're in the midst of negotiations with the U.S. government at this time concerning that.
But the billions raised through selling assets, issuing bonds, bank credit lines and the suspension of their dividend has the bond market believing BP can handle whatever comes their way.
Showing posts with label BP Bankruptcy. Show all posts
Showing posts with label BP Bankruptcy. Show all posts
Tuesday, October 5, 2010
Wednesday, June 30, 2010
Florida Tourism Industry Already Spends $25 Million of BP (NYSE:BP) Money
As we've mentioned before at Dripping Oil, when the decision was made to create an escrow fund, which BP (NYSE:BP) would be forced to pay into, there would be an extraordinary amount of potential abuses made, and that is predictably the case with the government, which only knows how to take and spend money.
BP recently provided Florida with $25 million for the state to use to advertise to supposedly combat the negative "perception" potential tourists had of the state.
The alleged use of the funds was to counter the negative press which could cause people to visit elsewhere.
Now the CEO of a Florida public-private marketing corporation is whining to Charlie Crist's Gulf Oil Spill Economic Recovery Task Force that not only the $25 million running low, but they need an additional $500 million from BP to continue their positive marketing campaign (which would include other states in the Gulf).
I think this person also said this with a straight face. A great acting job if that was the case.
This is an obvious abuse of the purpose of the escrow fund, which is what they're attempting to tap into. Could you imagine Gulf states being awarded $500 million of the $5 billion allocated in the fund this year for advertising?
It's also unclear how much the private sector participants in this "public-private" marketing corporation would get from it, but it's sure to be a lot, as would the government entities involved on the state and local levels.
This continued idiocy must be stopped in its tracks in order for the idea that BP has the ability to pay unlimited liability in these circumstances to be arrested. It doesn't. And if these types of requests continue to be made, it's sure to lead them to declare bankruptcy in order to manage and limit the payouts.
It also smells of governments trying to take advantage of the situation and use BP as a form of tax revenue to prop up their government programs they can't afford; such as the tourism unit.
BP executive Darryl Willis, vice president of resources at the company, said states should contact BP's chief operating officer of exploration and production, Doug Suttles, concerning the issue, and not attempt to go through the claims process to attempt to secure advertising money.
The hangover from the recession and mortgage crisis is a large part of what is driving these politicians and businesses, and these types of attempts to be opportunists to extract more money from BP will backfire, as they simply don't have the money to continue on meeting these types of requests.
BP recently provided Florida with $25 million for the state to use to advertise to supposedly combat the negative "perception" potential tourists had of the state.
The alleged use of the funds was to counter the negative press which could cause people to visit elsewhere.
Now the CEO of a Florida public-private marketing corporation is whining to Charlie Crist's Gulf Oil Spill Economic Recovery Task Force that not only the $25 million running low, but they need an additional $500 million from BP to continue their positive marketing campaign (which would include other states in the Gulf).
I think this person also said this with a straight face. A great acting job if that was the case.
This is an obvious abuse of the purpose of the escrow fund, which is what they're attempting to tap into. Could you imagine Gulf states being awarded $500 million of the $5 billion allocated in the fund this year for advertising?
It's also unclear how much the private sector participants in this "public-private" marketing corporation would get from it, but it's sure to be a lot, as would the government entities involved on the state and local levels.
This continued idiocy must be stopped in its tracks in order for the idea that BP has the ability to pay unlimited liability in these circumstances to be arrested. It doesn't. And if these types of requests continue to be made, it's sure to lead them to declare bankruptcy in order to manage and limit the payouts.
It also smells of governments trying to take advantage of the situation and use BP as a form of tax revenue to prop up their government programs they can't afford; such as the tourism unit.
BP executive Darryl Willis, vice president of resources at the company, said states should contact BP's chief operating officer of exploration and production, Doug Suttles, concerning the issue, and not attempt to go through the claims process to attempt to secure advertising money.
The hangover from the recession and mortgage crisis is a large part of what is driving these politicians and businesses, and these types of attempts to be opportunists to extract more money from BP will backfire, as they simply don't have the money to continue on meeting these types of requests.
Friday, June 25, 2010
BP (NYSE:BP) Bankruptcy and Increasing Focus on Anadarko (NYSE:APC) and Mitsui (Nasdaq:MITSY)
Over the last week or so, there's been an increasing focus on BP's (NYSE:BP) partners in the leaking oil well: Anadarko Petroleum (NYSE:APC) and Mitsui Oil (Nasdaq:MITSY).
At the outset it looks like it's a nod toward fairness and sharing the costs in the project, but so many things have been admitted by BP, that it's questionable as to whether or not the two companies could be made to contribute.
Lawmakers of course know this. So why the new interest in them? It's the growing awareness that the mounting costs related to the spill could bring BP to its knees and force them to declare bankruptcy to protect itself from creditors and liabilities.
If BP is forced to go bankrupt, there is no one else left to pay, and if government officials attempted to push that on taxpayers, their already tenuous political futures would be in even more jeopardy. It isn't going to happen!
Even though this is a genuine disaster, there was too much political posturing in response to outrage over the situation, and in attempts to appease the people. Things were put into place too quickly without thinking it through clearly and thoroughly.
What that essentially means is it's all on BP, and the issue of payment and liability is completely on them alone. Although there are ancillary lawsuits the other companies will face, it isn't near the liability faced by BP.
The other problem is BP is the only one out of the three with the type of capital and insurance to handle the lawsuits and claims; or at least with a legitimate shot at it.
Concerning the $20 billion escrow fund, some politicians are looking at the four-year length of it, and are aware BP could end up not having enough to pay out into it over that period of time. That's where the interest in Anadarko and Mitsui come in.
Then take the liability of BP with the Clean Water Act, which if they are deemed as being grossly negligent in the accident, could pay as much as $4,300 a barrel of oil that's emptied into the Gulf.
Depending on that outcome, and also finding out what the actual amount of oil that has escaped into the Gulf is, the costs would be astronomical, with the potential to come in at $142 million a day. How long could BP handle that on top of all its other liabilities? They couldn't is the answer.
Whether people like it or not, if all they try to do is destroy this company, and if any type of lawsuit is allowed to go forward against them, it is highly unlikely they'll continue going on without going bankrupt.
Even adding the two co-owner oil companies to the liability list won't help much, as what they could pay would be a relative drop in the bucket in contrast to BP.
Like it or not, this is another one of those too big to fail moments, which no one has the guts to say concerning the disaster.
Unfortunately, it is the legitimate pursuit of BP in the circumstances which is bringing it all about, and laws which will penalize them beyond what any company could probably pay. All this and we've barely scratched the surface of overall liabilities, although we've touched on the larger ones.
Bottom line as the growing costs are revealed, are there is no way this company will be able to survive without going bankrupt, unless there are actions taken to alleviate their liability, which isn't going to happen, as it would be political suicide.
It looks like taxpayers will end up paying for some of this, as there is simply no way BP will be able to.
At the outset it looks like it's a nod toward fairness and sharing the costs in the project, but so many things have been admitted by BP, that it's questionable as to whether or not the two companies could be made to contribute.
Lawmakers of course know this. So why the new interest in them? It's the growing awareness that the mounting costs related to the spill could bring BP to its knees and force them to declare bankruptcy to protect itself from creditors and liabilities.
If BP is forced to go bankrupt, there is no one else left to pay, and if government officials attempted to push that on taxpayers, their already tenuous political futures would be in even more jeopardy. It isn't going to happen!
Even though this is a genuine disaster, there was too much political posturing in response to outrage over the situation, and in attempts to appease the people. Things were put into place too quickly without thinking it through clearly and thoroughly.
What that essentially means is it's all on BP, and the issue of payment and liability is completely on them alone. Although there are ancillary lawsuits the other companies will face, it isn't near the liability faced by BP.
The other problem is BP is the only one out of the three with the type of capital and insurance to handle the lawsuits and claims; or at least with a legitimate shot at it.
Concerning the $20 billion escrow fund, some politicians are looking at the four-year length of it, and are aware BP could end up not having enough to pay out into it over that period of time. That's where the interest in Anadarko and Mitsui come in.
Then take the liability of BP with the Clean Water Act, which if they are deemed as being grossly negligent in the accident, could pay as much as $4,300 a barrel of oil that's emptied into the Gulf.
Depending on that outcome, and also finding out what the actual amount of oil that has escaped into the Gulf is, the costs would be astronomical, with the potential to come in at $142 million a day. How long could BP handle that on top of all its other liabilities? They couldn't is the answer.
Whether people like it or not, if all they try to do is destroy this company, and if any type of lawsuit is allowed to go forward against them, it is highly unlikely they'll continue going on without going bankrupt.
Even adding the two co-owner oil companies to the liability list won't help much, as what they could pay would be a relative drop in the bucket in contrast to BP.
Like it or not, this is another one of those too big to fail moments, which no one has the guts to say concerning the disaster.
Unfortunately, it is the legitimate pursuit of BP in the circumstances which is bringing it all about, and laws which will penalize them beyond what any company could probably pay. All this and we've barely scratched the surface of overall liabilities, although we've touched on the larger ones.
Bottom line as the growing costs are revealed, are there is no way this company will be able to survive without going bankrupt, unless there are actions taken to alleviate their liability, which isn't going to happen, as it would be political suicide.
It looks like taxpayers will end up paying for some of this, as there is simply no way BP will be able to.
Thursday, June 10, 2010
BP (NYSE:BP) Bankruptcy, Fact or Fiction
Many are wondering what is really happening with BP (NYSE:BP) and the claims that they are filing bankruptcy. Matt Simons, oil industry insider and the energy focused investment bank Simmons & Co. told Fortune magazine that BP will eventually run out of money from lawsuits, oil cleanup costs, among other expenses.
"They have about a month before they declare chapter 11 bankruptcy," said Simmons. "One really smart thing Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup, he continued, "but there isn't enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this, my guess is they'll go into panic and file chapter 11."
In less than seven weeks BP has lost over half its market value, this is BP's lowest level since 1996. Their bonds are also being crushed. Before April 22nd, the day the Deepwater Horizon sunk, BP shares were being traded above $60. With yesterdays close, there was a loss of 16 percent at $29.20.
"They have about a month before they declare chapter 11 bankruptcy," said Simmons. "One really smart thing Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup, he continued, "but there isn't enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this, my guess is they'll go into panic and file chapter 11."
In less than seven weeks BP has lost over half its market value, this is BP's lowest level since 1996. Their bonds are also being crushed. Before April 22nd, the day the Deepwater Horizon sunk, BP shares were being traded above $60. With yesterdays close, there was a loss of 16 percent at $29.20.
Wednesday, June 9, 2010
BP (NYSE:BP) Bankruptcy and Stock Trading
Many are concerned that BP (NYSE:BP) will file for bankruptcy and that their stock trading will continue to fall. Even though BP seems to have a we can handle it all attitude, they will eventually run out of money. With them putting out such large amounts for things like television ads to the tune of $50 million dollars, it makes you wonder how they are planning to continue on at this pace financially. Not to mention, they haven't even been successful in their fuel spill containment efforts or even scratched the surface of beginning to clean up this catastrophe.
There is also much speculation that BP is getting ready to cut their dividends in order to be able to pay for the Gulf oil cleanup. This sent BP shares plummeting below 400 pence today. At the end of the day trading, BP was down 4.2 percent at 391.5 pence. Before the hazardous spill BP was at 648 pence.
"Consumer borrowing unexpectedly rose in April but fell in March, suggesting Americans aren't too comfortable with their finances despite the economic recovery. The Federal Reserve on Monday said consumer credit outstanding increased at a seasonally adjusted annual rate of 0.5 % up $954.8 million to 2,440 trillion. Economists surveyed by Dow Jones News wires had for cast a $1.0 billion decline in consumer credit during April. But the surprise gain came with a revision to March, when borrowing fell $5.4 billion or 2.7 %, originally it was estimated rising by $2.0 billion," reports Jeff Bater and Meena Thiruvengadam.
There is also much speculation that BP is getting ready to cut their dividends in order to be able to pay for the Gulf oil cleanup. This sent BP shares plummeting below 400 pence today. At the end of the day trading, BP was down 4.2 percent at 391.5 pence. Before the hazardous spill BP was at 648 pence.
"Consumer borrowing unexpectedly rose in April but fell in March, suggesting Americans aren't too comfortable with their finances despite the economic recovery. The Federal Reserve on Monday said consumer credit outstanding increased at a seasonally adjusted annual rate of 0.5 % up $954.8 million to 2,440 trillion. Economists surveyed by Dow Jones News wires had for cast a $1.0 billion decline in consumer credit during April. But the surprise gain came with a revision to March, when borrowing fell $5.4 billion or 2.7 %, originally it was estimated rising by $2.0 billion," reports Jeff Bater and Meena Thiruvengadam.
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