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Investor mood lifts as BP survives spill grilling
Published in Saudi Press Agency on 18 - 06 - 2010

BP Plc shares climbed in London on Friday after its boss survived a bruising encounter with U.S. lawmakers and as hopes rose its $20 billion oil spill compensation and clean-up fund will cap public anger, according to Reuters.
The worst oil spill in U.S. history from a leaking deepwater well in the Gulf of Mexico has strained the reputation of U.S. President Barack Obama, sullied the region's rich wildlife, and wounded its fishing and tourism industries. The likely cost of cleanup, compensation and fines has almost halved the value of BP -- once Britain's biggest company.
But after Chief Executive Tony Hayward survived attacks on him by a congressional committee on Thursday, investors in London were in a mood to heed some analyst upgrades. "I think it's just follow through from the relief that maybe the worst of U.S. public opinion might have been capped, if not the leak or the bill," says Oriel Securities analyst Brendan Wilders, who has a "buy" rating on the stock.
At 0955 GMT, shares in BP were trading up 4.7 percent at 376.6 pence a share, -- 40 percent below their value 60 days ago, before the April 20 explosion that killed 11 people.
Ratings agency Standard & Poor's downgraded BP on Thursday, describing the fund as a competitive disadvantage, and said it could cut again if costs rise, while BofA Merrill Lynch and Seymour Pierce also cut their recommendations.
But Collins Stewart and Societe Generale, which had been cautious on BP since the accident, upped their ratings to "Buy" from "Hold", saying the share drop was so severe that BP now offered good value.
Most analysts kept "buy" or "outperform" ratings on BP as the shares collapsed, citing their cheapness relative to the company's asset base and rivals' shares, only for the worsening technical and political situation to push the shares lower. OIL STILL SPEWING
From a mile (1.6 km) below the surface, crude oil continues to gush into the Gulf of Mexico at a rate of up to 60,000 barrels a day, although BP is siphoning off some using a containment cap system and is drilling relief wells it hopes will halt the leak in August.
Louisiana Treasurer John Kennedy estimates environmental and economic damage could range up to $100 billion for his state and others along the Gulf Coast.
Hayward survived a trip to the White House with his chairman Carl-Henric Svanberg to meet an angry President Obama on Wednesday and then endured a verbal assault from lawmakers on Thursday.
But his failure to explain the causes of the spill led to renewed calls for him to go.
"No one at BP has been fired," Florida Democratic Representative Kathy Castor told Reuters Insider after the hearing. "It's time for heads to roll at BP."
In the meantime, some in the industry see BP as vulnerable to a takeover -- weakened by the $20 billion fund it is having to create.
"I would be shocked if two years from now BP is still an independent company," said Christopher Zook, chairman and chief investment officer of CAZ Investments in Houston.
POLITICAL AMMUNITION
The disaster has fouled at least 120 miles (190 km) of U.S. coastline, threatening multibillion-dollar fishing and tourism industries and killing birds, dolphins and other sea life.
The resulting political storm picked up when Republican congressman Joe Barton of Texas, a major recipient of oil and gas industry campaign contributions, apologised to BP at the hearing.
"It is a tragedy of the first proportion that a private corporation can be subjected to what I would characterize as a shakedown, a $20 billion shakedown," Barton said.
Hours later, under pressure from his own party leaders, he withdrew his apology to BP and said he was sorry for using "shakedown." Democrats hungry for electoral ammunition jumped on the gaffe.
Executives from rivals Exxon Mobil, Chevron, ConocoPhillips and Royal Dutch Shell distanced themselves from BP at a congressional hearing on Tuesday, saying BP had failed to adhere to industry standards in the construction of the well.
DECADES OF IMPACT ON THE GROUND
The undersea leak began with the explosion on an offshore rig, unleashing a torrent of crude into the Gulf of Mexico.
Environmentalists worry the political theater in Washington is taking the focus off the disaster in the Gulf.
"This oil is already into the wetlands and more is coming up every day. You cannot clean it out of there," John Hocevar, a marine biologist with Greenpeace, told Reuters in Louisiana. "The impact of the spill is going to be felt for decades." ($1=.6743 Pound)


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