They have a huge problem with the liability they will have to pay out for the oil spill. They have to pay for the clean up, for the lost revenue for people in the gulf, and for any lawsuits or fines that are brought forward.
I heard today that the BP stock went down about 15%. I would think that people will continue to drop the stock as the spill continues.
I'm starting to wonder if BP stock m ight be a good investment at some point over the next couple of months.
My main concern is that the litigation and cost of the spill will force some sort of bankruptcy.
My other concern is that people will start to boycott BP if this spill goes on to long. This isn't a very big concern because I think people need to buy gas and they won't go to a station farther away just to avoid BP. For some reason, it seems like President Obama is being blamed more than BP which doesn't make any sense at all.
There aren't too many times in history when you can buy stock in a company that basically is able to print money at will. We can see how the oil just flows out of the ground. All BP has to do is pump it, refine it, ship it, and provide it at the pump. This simple process is why BP has been making billions of dollars in profit each quarter.
What do you think. Is it time to buy some BP stock?
Personally, I think it is too risky at the current price. If it drops a lot more and the well gets capped, then I might consider a purchase of BP stock. You gotta figure they will draw out the liability costs in the courts. I heard today that Exxon dragged their feet so long that they ended up not paying very much in the Exxon Valdez disaster.
Interesting question though. I think I will try to find some other people's thoughts on this and post here what I find.
Well, the first thing I found is that the stock was hovering in the mid $50's and now it is in the mid $30's. I thought it might have dropped more than that, but half price on one of the oil giants would be a good deal depending on how much damage this oil spill causes.
The other interesting info is that the P/E ratio is around 5.84 which is also about half of the other oil giants.
Another thought is that "British Petroleum" is now a gloabl brand that has been trying to rebrand itself for many years. They have been advertising themselves as BP and Beyond Petroleum for years. I bet this is a perfect time for them to make a major name change.
I like the idea of buying BP stock. Yes, there is a chance they will file bankruptcy, but there also is a chance they will recover from this and return to their very profitable ways. From what I understand, only about 11% of BP's total production is in the Gulf Of Mexico. However, it is the most profitable production in BP's portfolio.
The chance for bankruptcy, the cost fo the clean-up and liabilities, and the length of drilling restrictions will all be factors in the future performance of BP stock.
The stock has bounced a little higher from its lows.
There is a chance that the well will be contained in the next few days. This will at least stop the flow of oil into the Gulf of Mexico. This means the damage will be done and it will be the end of the unknown length of continuing damage. This might boost the stock a little bit. Once the well is contained, more estimates will come in on what the totoal damage was. Then the fines and liability will be calculated. Then the court battles will begin as BP tries to avoid as much liability as possible.
Overall, I see the stock continuing to rise over the next few years unless the liability reaches a point that forces BP into bankruptcy.