The oil rig disaster in the Gulf of Mexico has damaged BP's reputation will they manage to avoid a share collapse to 350p.?



472p to buy this morning.

BP shares rise on 'white knight' rumours

BP shares jumped more than 15p this morning after newspaper reports that it intended to seek a 'white knight' to take a strategic investment in the embattled oil giant as a way of warding off unwanted bid offers from rival oil groups.

The share price has dived by more than 50% since the Gulf of Mexico crisis and major oil rivals are thought to have been preparing a hostile bid for the Group as soon as oil spill is capped.

Today BP said that the cost of its response to the Gulf of Mexico spill had climbed of $3.12bn.

By early afternoon the shares were 15.9p higher at 337.9p - 4.94% on the day.

Well done to all those brave puntersyou all deserve the praise.

Thank you my boy

from the ft.com ......

Last updated: July 5 2010 18:38

BP is running out of options. With at least a month to go before the relief well to stop the leak in the Gulf of Mexico is completed, and with the cost of the clean-up above $3bn, boosting its balance sheet is more important than ever. If the relief well fails, BP is doomed. But the likelihood of a failure should be remote: relief wells usually work.

That does not lessen BPs strategic dilemma, however. How urgent is its need for cash and how should it be raised? BP has earmarked $10bn of disposals, but these take time. Credit markets put up a keep out sign on June 23, when Fitch Ratings cut BPs credit rating from double A to triple B. One reason for this downgrade was that the balance of costs that BP faces is skewed to the near term. In any case, BPs debt is trading in even more speculative territory, so debt funding is not realistic. The only other option is to raise equity.

BPs market value has collapsed since the Deepwater Horizon accident on April 20. That alone must have strategic investors eyeing its assets. Seeking an investor such as a sovereign wealth fund, along the lines of what Barclays did early in the global financial crisis, is one solution and one that BP can control. Oil-hungry China must be one source perhaps including a long-term supply agreement.

An alternative is to woo a Middle Eastern investor. In spite of their overexposure to oil, they may be persuaded to take advantage of a one-off opportunity. No wonder Libyas senior oil official has hinted at such a move. Since desperate times call for desperate measures, Tony Hayward, BPs chief executive, and Carl-Henric Svanberg, its chairman, need to start thinking the previously unthinkable.

from the ft.com ......

Crisis-hit BP rules out issuing new shares
By Ed Crooks in London, Andrew England in Abu Dhabi and Simeon Kerr in Dubai
Last updated: July 5 2010 20:31

BP is not planning to issue new shares, the company said on Monday, in spite of the pressure on its finances caused by its huge oil spill in the Gulf of Mexico.

The group has been making overtures to investors in countries where it has good relationships, including the United Arab Emirates, in an attempt to encourage them to buy shares, but the company said that it was not trying to bring in strategic investors with new equity.

Libyas top oil official on Monday said that his countrys sovereign wealth fund should invest in BP to take advantage of the troubled companys falling share price. Shokri Ghanem, chairman of Libyas national oil company, made the comments as BP made contact with Middle Eastern investors.

BP is interesting now with the price lower by half and I still have trust in BP, I will recommend it to the LIA [the Libyan Investment Authority], Mr Ghanem told Dow Jones.

Shares in BP, which have lost almost half their value since its catastrophic explosion and oil spill in late April, closed 3.5 per cent higher at 333.3p in London. The group said on Monday the cost to date of the response to the spill had risen above $3bn.

Mr Ghanems comments came after an official in the Gulf told the Financial Times that BP had already been reaching out to investment entities in the region, particularly those with which it already had relations.

The official said the company was looking for access to capital to make it less vulnerable to competitors and takeover bids.

The message, the official said, was: Our stock is cheap, why not buy some? A senior international banker in the Gulf said there had been signs of interest in BP from investors in the region, but added there is a big difference between interest and writing a cheque.

They might be willing to invest if BP is desperate, but there is a long way to go yet. BP has not mandated advisers to market fundraising yet, the banker added.

The Gulf is home to some of the worlds biggest sovereign wealth funds, which have previously stepped in to inject capital into western banks, including Citigroup and Barclays.

BP has a particularly long history with the UAE, which is home to several government-controlled funds that invest in energy related assets.

These include the International Petroleum Investment Co, which was used as the vehicle for Sheikh Mansour bin Zayed Al-Nahyan, a member of Abu Dhabis ruling family, to invest $3.5bn in Barclays, and Mubadala, a state investment company. Abu Dhabi, the UAEs capital, is also home to one of the worlds largest sovereign wealth funds, the Abu Dhabi Investment Authority, which invested $7.5bn in Citigroup in November 2007.

BP is also active in Libya. It won an exploration contract there in 2007. The LIA is seeking to build up its portfolio.

The Qatar Investment Authority has also been one of the more active state investment vehicles in recent months.

Has open well up at 338p and now stand at 348p +14.70p

BP Piles Up Cash in Show of Strength -- By James Herron

BPs embattled Chairman Carl-Henric Svanberg and Chief Executive Tony Hayward

The oil leak into the Gulf of Mexico is as bad as ever and may continue for another month, but BP is piling up cash as fast as possible and looks increasingly like it can meet whatever financial demands the cleanup places on it.

Fears last month over whether the spill could push BP into bankruptcy look like little more than irrational panic now.

Back in the first half of June the picture looked very different. BPs shares were in free-falldropping 16% one afternoon in New Yorkthe cost of insuring its debt was ballooning and there were genuine fears that demands for upfront compensation from Congress and the White House could push the company into insolvency.

BPs June 16 deal with the White House to set up an independently-administered $20 billion fund to cover oil spill liabilities extinguished that particular fire and the company has been working hard since then to calm its shaken investors.

Shortly after the deal with the White House was announced, BPs Chief Financial Officer Byron Grote said:

Were taking a very prudent financial position during this period because of the uncertainties. While there is uncertainy out there, the company believes its prudent to continue to bolster its balance sheet to be able to address any uncertainties that might exist in the future.

BP has gone a long way towards that goal.

The company had a prior $5.25 billion credit line available with a number of banks and, in a show of support since the oil spill, eight or nine banks have offered additional standby credit lines totaling $9 billion. Add that to the $5 billion in cash BP already had on its balance sheet in early June, the $2.6 billion BP saved by canceling its first quarter dividend and another $2 billion loan secured against its stake in Russian oil giant Rosneft and BP already has war chest exceeding the size of the compensation fund.

BPs plan to sell $10 billion of assets to boost its balance sheet could pay off quickly if reports are correct that China National Offshore Oil Company could buy BPs stake in Pan American Energy for around $9 billion within weeks.

There may be further sources of cash, should BP need it. The companys gearing is at the bottom of its 20% to 30% target range, although borrowing would probably be an expensive last resort following recent downgrades to its credit rating from Fitch and Moodys.

There are also reports that a number of sovereign wealth funds from the Middle East are ready to pump billions in fresh equity into BP, although its hard to see such a dilution going down well with existing BP investors.

And despite BPs severe problems in the U.S., the vast bulk of its global operations continue as normal, generating around $30 billion a year in free cash flow.

The Head of Libyas National Oil Company, Shokri Ghanem, certainly gave a vote of confidence in BPs ability to survive the current crisis. I still have trust in BPIts a good opportunity for bargain hunters, he said, adding that he will recommend buying a stake in BP to the Libyan sovereign wealth fund.

So BP will live to fight another day, but its bosses may not. The need to restore the companys image and rebuild relations with the authorities in the U.S. make it increasingly likely that one or both of BPs public faces during the crisisChief Executive Tony Hayward and Chairman Carl-Henric Svanbergwill have to take one for the team.

Sources said that BP is considering selling some of its non-core assets in Colombia, Venezuela and Vietnam. This could be in addition to the possible sale of its $9bn stake in PanAmerica, for which the China National Oil Corporation may bid.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7873702/Libya-eyes-stake-in-bargain-BP.html

AFTER TODAY'S RISE comments of RBS upgrading to BUY with valuation of 455p.........

Shares in embattled oil major BP BP.L rise 3.2 percent to be among the top FTSE 100 .FTSE risers, after RBS upgrades its recommendation to "buy" from "hold" citing valuation grounds.

Traders also cite comments made on Monday by Shokri Ghanem, chairman of Libya's National Oil Corporation, who said in a telephone interview: "I think that BP shares are good value for bargain hunters."

The comments followed weekend newspaper reports that BP would seek a strategic investor to ward off takeover bids while the company's massive oil spill in the Gulf of Mexico spread.

RBS says BP shares have fallen 100 pence per share more than its base case scenario -- which implies direct costs connected with the incident, including negligent and non-negligent, of $67 billion or 235 pence per share.

BP's value has almost halved since oil began pouring into the Gulf of Mexico in late April, with its shares trading at around 340 pence.

RBS resets its target price to 455 pence from 595 pence given the share price fall, saying "catalysts for share performance are particularly evident in this case," adding it expects the first relief well to intersect the Macondo bore by mid-July, and "we believe this will be a turning point for BP's share."

BP asks oil spill partners to pay $400m
Demands sent to Deepwater Horizon partners Anadarko and Japan's Mitsui Oil Exploration as total bill passes $3bn

BP has sent a $400m bill to its partners for the Deepwater Horizon disaster. Photograph: KPA/Zuma/Rex Features

The oil spill in the Gulf of Mexico has so far cost BP $3.12bn (2bn), the company said this morning as it emerged that the oil giant is demanding that its partners in the well pick up at least part of the bill.

Last month, BP sent out demands for almost $400m to Anadarko and Japan's Mitsui Oil Exploration Company, both of whom are minority shareholders in the well. That is equivalent to 40% of the $1bn BP said it spent in May. Anadarko owns 25% of the well and Mitsui has 10%.

Details of the demands were contained in documents released by a Senate subcommittee last week. BP is demanding payment within 30 days, meaning that the two companies have roughly until the weekend to pay up.

Anadarko, however, has refused to accept any blame for the disaster. Last month its chairman and chief executive, Jim Hackett, said BP's actions probably amounted to "gross negligence or wilful misconduct". If proved in court, that could allow Anadarko to escape its responsibilities under its joint operating agreement. Mitsui, meanwhile, has said it is too early to conclude what happened on the Deepwater Horizon.

News that BP is trying to recoup some of its losses comes as the company updated investors on Monday morning about the scale of the salvage and clean-up exercise. Since the Deepwater Horizon rig exploded on 20 April, the cost of the response to date amounts to approximately $3.12bn, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. The news follows BP's agreement on 16 June to put $20bn into a special clean-up fund for the Gulf of Mexico oil disaster after company executives met Barack Obama.

Approximately 44,500 personnel, more than 6,563 vessels and some 113 aircraft are now engaged in the response effort. BP said on Monday that almost 95,000 claims for compensation have been submitted and more than 47,000 payments have been made, totalling almost $147m.

BP said two containment systems continue to collect oil and gas flowing from the Deepwater Horizon's failed blow-out preventer (BOP) and transport them to vessels on the surface. The first cap, installed on 3 June, takes oil and gas to the Discoverer Enterprise where oil is collected and gas flared. The second system, which began operations on 16 June, takes oil and gas to the Q4000 vessel on the surface where both oil and gas are flared.

As of 3 July, a total of approximately 25,198 barrels of oil were collected or flared by the two systems and 57.0m cubic feet of gas were flared. To date, the total volume of oil collected or flared by the containment systems is approximately 585,400 barrels.

Hurricane season
Preparations continue for the next step in containment operations, BP added, but work on a first floating riser containment system designed to allow more rapid disconnection and reconnection of the system thereby reducing the time that collection is halted by inclement weather has been delayed by heightened sea states caused by Hurricane Alex as it passed through the Gulf of Mexico.

It is currently anticipated that the first floating riser system will be available to begin operations towards the end of the week, BP said. Plans also are being developed for additional containment capacity and flexibility. These are currently anticipated to begin operations around mid-to-late July.

Work on the first relief well, which started 2 May, continues. The well reached a depth of 17,725 feet on 4 July. The second relief well, which started 16 May, has now reached 13,871 feet. Both wells are still estimated to take approximately three months to complete from the start of drilling.

Operations to skim oil from the surface of the water were suspended for approximately three days because of Hurricane Alex. To date, these operations have recovered, in total, approximately 673,497 barrels of oily liquid. In addition, a total of 275 controlled burns have been carried out to date, removing an estimated 238,000 barrels of oil from the sea's surface.

The total length of containment boom deployed as part of efforts to prevent oil from reaching the coast is now almost 2.9m feet.

From what I can make out the fractured pipe is beneath around 5,000 feet of waterand then around 13,000 feet under the seabednow so far BP have tried to activate the well's blowout preventerwhich failedattempted to place a dome over the fracture that got clogged up almost immediately and failedthen there was the top kill maneuver that lasted a couple of days and failedBP then tries another capping strategy but has difficulty cutting off a leaking riser pipewhich failedthen there was this supertanker converted into a super skimmer? That seems to go quite the minute the wind blowsbut the saviour is going to be a relief wellstill weeks from completionthis is going to travel down and along 18,000 feet and hit a target the size of a footballnow using the other attempts as a form lineanyone want to price up the chance of success?they do seem confident though?I believe they are trying to rustle together as much support prior to another failuresuccess would see the SP = 5 failure SP = 2.I cant price up the odds for successbut I dont believe it is an odds on shot!

Just shorted it at 341p... weakness will prevail.

Am also watching for evidence of a DCB. I think you you might be a little early though hlyeo. This could easily go to 370 or 380 before turning back down.

It has retreated from this morning's high... hopefully you're wrong... wish me luck.

Yes it has but IMHO I think the USA will fly up today +290 my prediction and it should take BP up with it.

hlyeo - good luck. Where's your stop? And what's your target?

welcome back to the human race clubby!
i think +290 is pretty wishful stuff, but closing anything ahead of the opening will do nicely

Thank's Cynic Dow 90 up allready my boy

ADRs = $31.48

Their score and success rate with drilling relief wells is 41 tries and 41 successes.

I guess one can say they have now perfected their technique and this latest effort should make it 42/42.