BP Shares Surge After $20B Oil Spill Fund Deal

[babylonsister]

BP Shares Surge After $20B Oil Spill Fund Deal


LONDON (Dow Jones)--Shares in U.K.-listed oil giant BP PLC (BP) jumped as much as 9.8% in London Thursday after the company struck a deal with the Obama administration a day earlier to set aside $20 billion to cover Gulf of Mexico oil spill costs by slashing spending.

At 1130 GMT BP shares were up 7.1%, or 24 pence, at 361p, leading the FTSE 100 index.

Several analysts upgraded the embattled company to a "buy" recommendation, despite BP's promise to cancel at least $7.8 billion in dividends, sell off $10 billion in assets and reduce capital expenditure by at least $4 billion as it looks to build up the $20 billion fund over the next 3 1/2 years. The fund will not cover civil or criminal penalties.

"BP's package agreed with President Obama should cool the political heat and provide some degree of comfort to equity and bond markets, shareholders," said Evolution Securities analyst Richard Griffith.

more...

http://online.wsj.com/article/BT-CO-20100617-705201.html?mod=WSJ_World_MIDDLEHeadlinesEurope

[Laelth]

1. They see it as a cap on liability.

I believe $20 billion amounts to only one, quarterly dividend payment for BP. If that's all they owe, they're in great shape.

Of course, the President assured us that the $20 billion figure is not a cap, but if it isn't then I see no reason why BP's share value would increase.

:dem:

-Laelth

[BzaDem]

2. It couldn't possibly be a cap.

Obama does not have the power to waive liability on behalf of Gulf Coasters. They are likely liable for unlimited economic damages due to negligence (which removes the 75 million federal cap), and that cap doesn't even apply to state damages.

[Laelth]

3. I agree. Obama does not have that power.

So, do you have another explanation for why BP's share value has increased dramatically.

:dem:

-Laelth

[lunatica]

4. I wonder for real what the CEOs of the bailed out corporations are

thinking. Obviously Obama is getting some serious money and action out of BP, and forcing shareholders to pay a price. The boardrooms must be buzzing.

[TexasObserver]

5. They don't realize it's just the "security deposit" on this mess.

It's the only good news story on BP for two months, so the stock sees an uptick.