Is BP a Buy?

Yesterday I penned an article asking readers to decide which troubled corporate giant they hated more: BP (NYSE: BP  ) or Goldman Sachs. BP has found itself on the wrong end of the public stink-eye, thanks to a catastrophic oil spill in the Gulf of Mexico, while Goldman has become the symbol of Wall Street greed and smarminess.

As of late in the day yesterday, far more readers would like to see Goldman tarred and feathered -- to say the least. In fact, there were more people who said they had no ill will toward either company than there were who wanted to flip the bird at BP.

With that in mind, what should we make of BP's stock? At the end of yesterday's trading session, BP's stock had fallen by nearly 40% since the Deepwater Horizon oil rig explosion on April 20. The stock currently changes hands at 3.4 times BP's trailing EBITDA, as compared with 4.7, 5.4, and 5.0, respectively, for ConocoPhillips (NYSE: COP  ) , ExxonMobil (NYSE: XOM  ) , and Shell. And at least on a trailing basis, BP's stock yields a massive 9% dividend.

Is this stock a screaming buy?

First, a history of disasters
Back in October 2000, the bottom of a Massey Energy coal sludge impoundment broke. Some 300 million gallons of sludge went sliding down Kentucky's Tug Fork River, covering nearby residents' yards and smothering wildlife.

Based on the trading of Massey's stock following the spill, it's unclear that investors reacted negatively to news of the incident. And though the stock traded down considerably by the end of 2002, the entire market was also slumping. What is clear, though, is that investors who held onto the stock in spite of the spill did quite well. Between the day before the spill and today, Massey's stock has had a total return of 313%, versus a 23% loss for the S&P.

Meanwhile, the poster child for big oil disasters in the U.S. before the BP mess was the Exxon Valdez spill. Exxon faced heaps of criticism over the way it handled the spill, and it was cagey, at best, in its efforts to pay for damages. Yet once again, investors would have done well by hanging onto the stock. Between the day before the spill and today, Exxon's stock, adjusted for splits and dividends, has increased by 930% versus the S&P's 271% gain.

Am I highlighting these incidents because I'm a terrible person who enjoys environmental catastrophe? I'd like to think not. Rather, I'm highlighting them to show that companies can survive these kinds of foundation-shaking events and there's often no reason for shareholders to run for the hills.

But more importantly ...
Right now, investors seem most concerned with whether BP can survive the financial hit from costs associated with the spill. So far, the company's talking points suggest that it will willingly pay for cleanup costs and damages, but that could soon be an irrelevant gesture, since it may end up legally obligated up to a huge sum.

Estimates on how much the spill will cost vary greatly, ranging from lowball numbers in the $3 billion range all the way up to $25 billion or even $30 billion. When considering these hefty tabs, though, investors need to remember that BP has only a 65% interest in the oil field, with Anadarko Petroleum (NYSE: APC  ) and Mitsui owning the rest. Driller Transocean (NYSE: RIG  ) , services provider Halliburton (NYSE: HAL  ) , and blowout-preventer manufacturer Cameron International (NYSE: CAM  ) may also end up on the hook for part of the costs.

When it comes to BP in particular, many commentators have pointed out income-statement and cash-flow statistics such as the company's trailing-12-month profits of $20 billion or its trailing cash flow from operations of nearly $30 billion. While these are certainly notable in assessing BP's ability to cough up enough to cover this spill, I think its balance sheet is even more interesting.

As of March 31, BP had nearly $7 billion in cash on its balance sheet. Those should be available, liquid funds that it can put toward immediate costs, including containment, relief-well drilling, and cleanup. And that may actually be sufficient for now, as a good portion of the costs are likely to come over time.

Meanwhile, the company's capital base is currently only 23% debt. That's substantially higher than Exxon's 7%, but it's well below other oil giants such as Conoco and Statoil, which are at 35% and 32%, respectively. This figure suggests that BP may have significant borrowing capacity.

And if it does need to tap the debt markets? At the end of 2009, BP's average borrowing cost on U.S. fixed-rate debt was 4%, while its rate on floating-rate debt was an even lower 1%. Though Moody's still has an Aa1 rating on BP -- its second-highest rating, the company's credit default swaps are implying a much lower rating, suggesting that it won't be able to get Aa1-pricing on new debt.

But to put numbers to it, even if BP had to pay 6% on new debt, it would still only be on the hook for $60 million per year in interest payments for each billion borrowed. Over the past 12 months, BP's EBITDA was close to $40 billion, and it paid a mere $638 million in interest payments. Clearly, if needed, BP can shoulder additional debt to pay for the spill.

There are no free lunches
I do believe there's a clear case for BP at its current price, but there are still some scary unknowns.

For one, the American public is hopping mad. Whether it's been the financial crisis, the health-care debate, financial reform, or any number of other issues, President Obama has been fighting on an untold number of fronts -- most of them hotly contested. I can't help wondering whether he'll see this as a public-sentiment slam dunk and use BP as a whipping boy to try to win approval points.

Though BP is a U.K.-based, global company, the presidential wild card is particularly significant for the company, given its large footprint in the Gulf of Mexico and the U.S. in general.

The disaster is also still unfolding, as efforts to stem the gusher have so far failed. A lot will depend on how BP's further mitigation tactics work to keep the spill from getting even larger. A lot also rides on BP's public response to the spill and whether it carries through with its promise to be forthcoming with money for damages. On the most recent edition of Motley Fool Money, Corporate Library co-founder Nell Minow didn't exactly have nice things to say about BP's response so far, so there may be significant ground for the company to make up.

And maybe most importantly, it's still unclear whether BP did make legitimately bad, or even potentially criminal, decisions before the explosion. If the just-announced federal investigation finds a smoking gun of negligent behavior, we could be talking worst-case scenarios.

Money, meet mouth
My money is where my mouth is on this one. I owned BP before the Deepwater Horizon disaster, I bought some more after the initial downdraft, and I've rated it an "outperformer" in The Motley Fool's CAPS community. Now that I've written about BP in each of the past two days, I'm restricted from any action in the stock by the Fool's disclosure policy. But once that lock-up expires, I wouldn't count out dipping in again.

As there are significant uncertainties involved here, there's always the possibility that I'll end up with a foot in my mouth, but at this point BP's stock looks like a pretty compelling opportunity to me.

Now I want to know what you think. Is BP a buy? Or will BP stand for "Bad Purchase" for investors jumping in now? Scroll down to the comments section, and share your thoughts.

OK, so maybe BP isn't your cup of tea. If that's the case, why not check out these big stock ideas for big profit?

Statoil is a Motley Fool Income Investor recommendation. Moody's is a Motley Fool Inside Value pick and a Motley Fool Stock Advisor choice. Motley Fool Options has recommended writing puts on Moody's. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Matt Koppenheffer owns shares of BP but of no other company mentioned. Check out what Matt's keeping an eye on by visiting his CAPS portfolio, or you can follow him on Twitter, @KoppTheFool, or on his RSS feed. The Fool's disclosure policy assures you no Wookiees were harmed in the making of this article.


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Comments from our Foolish Readers

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  • Report this Comment On June 02, 2010, at 3:45 PM, kedo76 wrote:

    I am extremely happy I was able to squeak out a profit on XOM just in time for that to drop so I could buy BP. Blood's in the street's; people are fearful, blah, blah, blah...but if all those are true, buy. Besides, it's just a part of a nicer portfolio so if it does tank...well, that's why we play this game, isn't it?

  • Report this Comment On June 02, 2010, at 4:32 PM, jigar34 wrote:

    Not being an active investor during Massey's environmental disaster, and being too young when Exxon spill occured, I am not sure how to handle the emotional ride BP has put me through. I have continued to buy as the stock goes lower and my cost basis now stands at $47.12, with a yield of 7.13%. If the dividend it not cut then I will be just fine. But non of the matters as long as the leak is ongoing.

    My investment may be fine but perhaps there is an opportunity cost element as well since I could have bought more of JNJ instead, which is also facing some issues related to recalls. But I think JNJ's issues are contained and more manageable then BP's as Tylenol is not a huge part of JNJ's revenue stream.

  • Report this Comment On June 02, 2010, at 4:36 PM, Curmudgeon44 wrote:

    One thing you do NOT take into account is that by all appearances BP has a corporate culture which leads it toward being a serial offender. A very very important difference between it and Exxon-Mobil.

    It is not clear that even $30 billion will pay for the damage, and it affects a far larger part of America than any previous disaster that I can think of. Exxon's Valdez by comparison occurred in an unpopulated area. Would you care to compare this to Three Mile Island? Indeed there were profits to be had by stubbornly holding stock in General Public Utilities long enough... if you could stomach the yuck factor...

    If you could have bet on OJ Simpson getting off scot free, that might be another comparison. Do you have enough cynicism to sleep at night had you done that? BP may end up paying far less than the damage it has done, but in my opinion this will change the US energy industry rather more than Three Mile Island did. All the alternatives, conventional or greenie, are going to cost more money, I think considerably more.

    If you do enough harm to a big enough part of the economy, that is how you create a depression. This may take a lot longer to recover from, than the usual business cycle. A depression may not occur but it has me concerned.

    Disclosure: My family is heavily invested in XOM both in career and in common stock.

  • Report this Comment On June 02, 2010, at 4:46 PM, TMFKopp wrote:

    @jigar34

    "the emotional ride BP has put me through."

    Handling emotions is one of the most difficult parts of investing. Sometimes you have a bad feeling in the pit of your stomach about a stock and it turns out to be right, but often a collective uncertainty and uncomfortableness in the market causes investors to overreact.

    "I have continued to buy"

    Just to echo kendo76's comment above, even though I personally think BP looks like a compelling opportunity and have been buying it for my own portfolio, I haven't and won't commit a huge portion of my portfolio to the stock. That goes for any stock for that matter -- though many of the best investors have done well by keeping a concentrated portfolio, I prefer to stay diversified to insulate from company, industry, geographical, and other risks.

    "If the dividend it not cut "

    This is an interesting question. It looks like Congress is beginning to saber-rattle about the company halting its dividend. As long as BP is coming up with the money it needs to pay for the spill (and as I noted in the article, I don't think it will have too much of a problem doing that) I think this is an utterly silly suggestion. But that doesn't mean it won't happen.

    Matt

  • Report this Comment On June 02, 2010, at 4:46 PM, ChannelDunlap wrote:

    I still would not touch BP with a 1,000 yard stick. I did notice the 15% drop the other day and raised an eyebrow, but in the scope of things, I think it's appropriate and that the company has more room to fall before it is fairly valued, giving the current situation.

    They are, after all, responsible for the greatest ecological disaster that any of us will [hopefully] see. It is nothing to be taken lightly.

  • Report this Comment On June 02, 2010, at 4:51 PM, reward2629 wrote:

    I had a substantial investment in BP but sold it all when it hit just above $40. after buying it for $52. If you listen to the current administration, I believe they will want to take advantage of another disaster to implement more socialist changes as they did in health care. The public will continue to be conned and accept whatever the President dictates such as cap and trade which will be his next socialistic. This is the perfect time to shove it down our throat or should I say put a boot on our throat.

  • Report this Comment On June 02, 2010, at 5:00 PM, Puckplayr4 wrote:

    Oddly, I just bought a little BP about 10 minutes BEFORE reading this article (and I'm glad it says what it says!).

    My research took me to Wikipedia to first learn WHEN the Exxon Valdez happened, then I tracked XOM stock from that point forward, and it didn't even blink in the wake of that storm...and I HATED Exxon for how they handled that disaster (Still do for that same reason). That might even partly be why I am an environmental scientist today. Anyway, working in the environmental consulting field, I personally think BP has handled this extremely admirably (although not entirely capably).

    As the legal owners of the majority of the rig, rather than duck and dodge, they basically said "its our responsibility, we'll clean it up. And we'll pay more than we are legally obligated to so that everyone is made whole". Ok, I guess there shouldn't be quotes on that, but that's essentially what they said. Sure the government is going to make them pay more anyway, although they could probably fight that argument as an ex-post facto law, they know its not worth the negative pub. They know they have one option, fall on the sword, commit to basically funding the "Heal the Gulf" movement over the next 50 years (props to Heal the Bay in Santa Monica, CA), and when it does shake out in court, expect Halliburton, and/or Transocean to get stabbed right in the eye.

    I agree, the criminal investigation is the wildcard, but even that will probably fall to Haliburton (HAL) or Transocean (RIG) to continue to blame the others for failure to act. And don't be surprised if that witch hunt turns the government on itself. Obama's not going to miss this chance to show that the "Profit All Cost" republican mantra is the reason why we'll need to re-elect him. Bush, Oil-man. Cheney, Haliburton. This is Obama's Berlin wall...and I suspect the criminal proceedings will point as much to internal malfeasance as it will to corporate America's failings.

    MY other reason to buy BP was that once they do get this siphon thing to work in a day or two, or a week or two, I expect a lot of the investment lemmings to return to BP's shores.

    My point is BP was handed a BAD situation and in hind-sight should have taken more responsibility for how the rig was being run...but I personally know a few environmental health/safety professionals that work for BP, and as a company...they have the right people and the right ethics - internally, where it counts. They work hard to achieve the right thing...not just a bunch of B.S. to make everyone think they mean well.

    Prior to this I owned (and own) Repsol...but like the market bottom of 2009 (and the collapse before that), this seems to me to be another excellent buying opportunity in a solid company, that will only be that much better for having gone through this.

    To this day I won't buy Exxon gas...but I will still happily go to my local AM/PM, Arco, or BP because I know these guys are doing what so few other companies would, they running into the storm, not running from it. Cheers to BP.

  • Report this Comment On June 02, 2010, at 5:20 PM, TMFKopp wrote:

    @Curmudgeon44

    I certainly appreciate your sentiment and I stress that I'm not interested in absolving BP -- if this isn't a disaster of its creation, it's at least a disaster that's its responsibility.

    However...

    "Would you care to compare this to Three Mile Island?"

    I was going to, but I didn't because I didn't want the article to be overwhelmingly long. But hanging onto GPU would have actually been a good move after Three Mile Island. Since GPU was acquired in 2001, past share price history may be questionable, but the data I have shows that shares increased 356% from the day before the accident to the time of acquisition. Adjusted for dividends, the returns were 1,029%. This is against a 858% advance for the S&P over the same period.

    "If you could have bet on OJ Simpson getting off scot free, that might be another comparison."

    Wasn't sure whether to even address this since this is a silly comment... OJ was "accused" of committing an actual crime and had he been convicted, it would have been for purposely setting forth to take other people's lives. At the very worst, BP was criminally negligent, it didn't purposely set out to create an oil spill.

    Actually, on that note, I've found it funny that some commentators have suggested that the government take over for BP in the remediation / containment effort. I can guarantee you that BP is HIGHLY incentivised to do everything in its power to stop this spill. With every additional drop that goes into the ocean, costs -- both financial and reputational -- rise for BP.

    "If you do enough harm to a big enough part of the economy, that is how you create a depression."

    There is much about this disaster that's overwhelming, but there is no chance of it having that kind of impact on the overall economy.

    and finally...

    "One thing you do NOT take into account is that by all appearances BP has a corporate culture which leads it toward being a serial offender. A very very important difference between it and Exxon-Mobil."

    Maybe that's true and that's certainly a risk. Look at Massey, it had that sludge spill a while ago and now it's ended up with another major disaster.

    But something to consider here is that BP has more exposure than most (if not all) other major oil companies to the U.S. That means when BP screws up it is far more likely to be right in our face.

    Is Exxon a better run company than BP? Quite possibly. But is it's stock as much of an opportunity right now as BP? Probably not.

    I do appreciate the fact that you noted your conflict of interest on the issue though...

    Matt

  • Report this Comment On June 02, 2010, at 5:22 PM, Puckplayr4 wrote:

    Funny...I just read some other comments and what an interesting mix this Foolish site is. Curmudgeon44, I don't think this is the best place for this argument, but I think since Exxon butters your bread, you are a little blind to the oil that to this day still sits and pools in any (physical) depression in the Prince William Sound of Alaska or the herring which have never returned, or the local fishing village which has all but died.

    I do readily admit that since then, XOM has made leaps and bounds and I actually (sort of) hope to work for them someday up in Prudhoe Bay, or anywhere they see fit to put me...but at the time, when it happened and how they handled it...it was disgusting. It was sort of like when an employer tries to get out of a legitimate workers comp claim. There is an injured party, and that injured party might just have to do without if the big boys have a better lawyer.

    I hate to admit, as an environmental scientist, Its not the worst thing in the world that people are remembering the Exxon Valdez, its just unfortunate that a bigger disaster had to occur for that to happen.

    This might be the worst environmental disaster in recent memory, but in 10 years, deep-water drilling will be that much safer, efficient, and better managed for it.

  • Report this Comment On June 02, 2010, at 5:23 PM, TMFKopp wrote:

    @Puckplayr4

    Thanks for chiming in! Considering your profession and the people you know, that's a very interesting take on what's going on.

    Matt

  • Report this Comment On June 02, 2010, at 5:27 PM, Puckplayr4 wrote:

    Curmugeon44 - Forgot to mention...TOTALLY disagree

    "One thing you do NOT take into account is that by all appearances BP has a corporate culture which leads it toward being a serial offender. A very very important difference between it and Exxon-Mobil."

    And for the record, I'd like to work for ANY big oil company...that's like pitching for the Yankees in my field.

  • Report this Comment On June 02, 2010, at 5:57 PM, stan8331 wrote:

    Buying BP right now is like playing Russian Roulette and not knowing how many shells are in the chamber. We have no idea how massive the ongoing ecological disaster may turn out to be, but we DO know that a heckuva lot more voters live on and around the Gulf Coast, in comparison to Alaska. Once you bring Florida and possibly even the Atlantic coastline into the equation, BP's massive balance sheet could begin to look like a raindrop in an ocean of oil. We're not just talking about horrific environmental aesthetics - this will mean lost jobs and higher consumer prices. Maybe the damage will be limited and BP will eventually emerge as a highly profitable company, but I wouldn't bet my farm on it.

    I suspect it's a lot more likely that anyone who thinks this is just a great buying opportunity for BP could end up face-planting into a brick wall...

  • Report this Comment On June 02, 2010, at 5:59 PM, Pandorabelle wrote:

    The greed, deceit and disrespect shown by BP cutting corners, with no back-up plan when so much is at stake, is despicable. I could never support BP with a penny of my money. Our ethics define us, and no amount of potential profitability is worth selling out.

  • Report this Comment On June 02, 2010, at 6:00 PM, MMTInvestor wrote:

    I used to be very interested in initiating a position in BP, plc based on valuation, dividend yield, and long-term growth in the integrated oil majors/energy space. Having since read the WSJ reports and watched Kudlow's commentary regarding BP's practice of trading oil with Iran, however, I think investing in BP for whatever reason is morally reprehensible. "Morally reprehensible" in this case isn't even remotely analogous to the supposed morally objectionable character of investing in tobacco companies.

  • Report this Comment On June 02, 2010, at 6:04 PM, Notsonovice wrote:

    Actually I think BP is a buy at present prices. As with all disasters, this is likely a temporary impact to BP's profits. Even if the US decides to ban drilling in the gulf (which it won't), the price of crude would go up and reduce the financial impact to BP.

    There is a lot of emotion in the comments above and in the press and a lot of politics in Washington. The fact is, that BP stepped up to the plate early and has done everything possible to reduce the impact. Their "culture" that some folks denigrate is very safety conscious inspit of what you might think about Texas City and Gulf Horizon. Don't forget, BP was NOT the driller here. They did not control how the well was drilled or how the rig was built.

    there is no doubt this is a huge disaster and BP and others will pay for it. But it has the financial resources to pay for it.

    Will the hefty dividend be cut. Perhaps but only temporarily. Politically that would be very distasteful for BP because all the UK pension funds own BP stock. Will this incident impact BP's income? Only to the extent of one-off fines. Not likely much impact long term. So I cast a vote for BP at this point. You don't often find a quality income producer at such a discounted price.

  • Report this Comment On June 02, 2010, at 6:05 PM, jaren43684 wrote:

    BP is just an unscrupulous company as shown in the TEXAS City damages to many workers. Regardless of where they are located, they do not care about the environment, so this spill and how it is being handled (not handled) should be no surprise to anyone who is familiar with their mode of operation.

  • Report this Comment On June 02, 2010, at 6:10 PM, kayakmastr wrote:

    So many can estimate BP's resources and extend past performance forward, but does that extension include another drilling disaster? But no one knows the extent of the disaster! So if the flow continues to August and perhaps beyond, and the ocean currents carry the oil up the eastern seaboard, what then is left of BP?

  • Report this Comment On June 02, 2010, at 6:18 PM, kgeechee wrote:

    IMHO, BP personnel should have criminal charges bnrought against them. I'm sorry that I cnnot name "Names" as I did not save the article on the meetings that were held between the operational personnel, HAL, I believe, and BP, financial personnel. This was long b4 the 'accident'.

    Short version: HAL pleaded that the safety requirements were being shorted; BP said "DO IT OUR WAY or ELSE!"

    BP 'won' the fight BUT the HAL people were killed in the predictable blowout occured while the BP goons were safe in their offices.

    BO is getting getting away with murder....not a legal definition of course. There is no smoking gun, BP knows what their people did.

  • Report this Comment On June 02, 2010, at 6:29 PM, fire56 wrote:

    My my, everyone's so concerned with BP. Well we should be but that's not our biggest problem. The hand on our throat is not what will happen to BP, it's the Obama crowd, they are far more dangerous to the whole world than BP will ever be. BP is not going to tax you out of existence, BP is not going to take your First, Second,etc amend-ments away from you. You may lose some money on BP but this government will take everything you have by the time they are through. This country is being envaded by your enemies and most of you don't even seem to care. You will care when our Constitution and Bill of Rights are gone because of the slimy polititians in DC.

  • Report this Comment On June 02, 2010, at 6:33 PM, PositiveMojo wrote:

    The real question is whether or not BP is a well managed company. It appears that many of their policies contributed to the disaster. That reflects a lack of a deep understanding regarding the risks of their operations and that is quite troubling. This lack of competence could be a significant liability in civil lawsuits. Remember that lives were lost.

    It reminds me of a few ago when I sat in the office of a friend and he told me what a great buy Enron stock was - and that he was putting every penny in it. The same friend, who lost his shirt, then got into real estate and said it was the hottest thing going. Some people don't learn - even when they go through tough lessons.

  • Report this Comment On June 02, 2010, at 6:33 PM, cloudbaseflier wrote:

    Ok, let's just say we wallop BP with say, $37b in damages for DWH.

    So, let's put ourselves in the position post-DWH of making an investment...in a deep water oil well. How can we justify such an investment, that might, say if it was as productive as Campeche or Golden Lane in the same areas of the Gulf (production rates of up to 100kbarrels/day, or about $2.5b/year in revenue) if it could possibly yield 10's of billions in damages if things go wrong. It's not a no-brainer, as I'm assuming many wells produce much less than 100kb/day. I'm guessing that the administration, not to mention the driving public might want to consider not going all medieval on BP as it could mean a defacto permanent moratorium on deep water oil wells by all players...where all the remaining oil is to be found. I expect this is how it will eventually shake out; coupled with improvements in prevention technology, we'll all realize that if we want to use oil, there's going to be some unavoidable environmental downside. Consider that we already do this vis a vis CO2 emissions...we know that we are playing with climatological fire, but continue our oily ways. Penalizing unnecessarily those that enable our behavior just isn't sensible...unless we want to start paying a lot more for energy. But perhaps we are all still in denial... Long as of yesterday in BP.

  • Report this Comment On June 02, 2010, at 6:37 PM, jerryc3 wrote:

    my BP puts look pretty good right now and I think they will look even better before the stock does.

  • Report this Comment On June 02, 2010, at 6:38 PM, cadunce wrote:

    Gota agree with fire56, because we may screw up our planet, and pollute our oceans, and melt our icecaps, and cut down our forests, but our biggest threat is definitely Obama taking away our rights, like the right to carry assault rifles and granade launchers in public. We really don't need any of that other stuff as long as we have our grenade launchers.

  • Report this Comment On June 02, 2010, at 6:39 PM, valari25 wrote:

    "you are a little blind to the oil that to this day still sits and pools in any (physical) depression in the Prince William Sound of Alaska or the herring which have never returned, or the local fishing village which has all but died. "

    Ummm, What? Yeah, you can turn some rocks and dig into the sand and find oil, but most of it is gone or buried. You have to go looking for it to find it nowadays.

    The herring population got wrecked, and then got overfished in PWS. The commercial fisherman never bothered to let it try and recover. Every other species came right back, better then ever.

    Valdez, that little fishing village you refer to, won't die so long as the TAPS still has oil flowing through it. Their city council is doing their best to kill off every other part of the local economy though. From the horrible decisions with the dock and the cruise liners to the locals refusal to cater to the tourists they rely on to the unregulated charter boats decimating the halibut population, Valdez is not dying because of the spill.

    Exxon is well liked in Valdez. They made a lot of people a lot of money with that spill. "Enviromentalists" still milk that spill for jobs in Alaska.

    As for BP, I am thinking of playing it with options. I see so much uncertainty with the total cost that it is worth the risk protection to me.

  • Report this Comment On June 02, 2010, at 6:44 PM, ifool100 wrote:

    OMG! BP a buy? You have got to be kidding! Will you support a company with over 760 OSHA safety violations? They have one of the worst safety records of any major oil company operating in the United States. Will you buy a company that is (as I write this) effectively destroying our coastline and economies with consequences that our worst enemies can only dream of? Who's CEO's response to the worst environmental calamity in our history, caused by his company is "What did we do to deserve this?" and "I just want my life back"! When you buy a company you are voting for them to continue doing what they do. I love making money as much as anyone. When it comes to endangering the lives of our children for decades to come - I draw the line. There are more ethical ways to get rich.

  • Report this Comment On June 02, 2010, at 6:44 PM, ozzfan1317 wrote:

    Eveyone is entitled to their opinion but stock looks cheap to me wish I had the money to buy more.

  • Report this Comment On June 02, 2010, at 6:48 PM, zatman wrote:

    Setting the disaster aside, from a strict valuation and assessment of potential payouts, has anyone considered

    how much, if any, of the damages done by all of the parties involved are covered by bond or insurance? If so, how much is covered and who is really on the hook for payouts -- the oil guys or the insurance and re-insurance boys?

  • Report this Comment On June 02, 2010, at 6:53 PM, plange01 wrote:

    bp and massey are great buys.a company like goldman garbage forget it!!

  • Report this Comment On June 02, 2010, at 6:55 PM, 1jealar2 wrote:

    I inherited Bp and watched it go down to where it is in March 09. Bp used to be Amoco. Both companies have exhibited blatant disregard for human life with numerous tragic accidents two of which occurred during my brief ownership! Expecting more of the same, I am proud to say I sold my shares sometime back!! Sadly we now have a whole host of issues that have been created as a result of Bp. I would not own Bp stock under any circumstance!

    1jealr2

  • Report this Comment On June 02, 2010, at 6:58 PM, ElCid16 wrote:

    If I'm not mistaken, BP doesn't have insurance coverage for drilling accidents...

  • Report this Comment On June 02, 2010, at 6:58 PM, TheFatCityChamp wrote:

    No way I would touch BP right now.

    Living in New Orleans, I keep hearing these guys put their foots in their mouths repeatedly. They have been obfuscating the severity of the spill since day one.

    Everything they've tried to stop the leak has failed so far. They are running out of ideas. It looks like the leak won't stop until they drill the relief well, which takes 90 days (though they have started this already).

    Hurricane season is here, and there is no El Nino this year. Combined with higher water temperatures than usual in the Atlantic, this leads to all the predictors calling for an extremely active hurricane season. Everything in the gulf shuts down when a storm gets close. If they have to keep pausing the drilling of the relief well due to hurricanes, it could be Christmas before this leak is stopped.

    At 70,000 barrels a day, that's a lot of oil to clean up compared to now. Also, if the storm surge from a hurricane pushed all this oil onto land, who knows what the cleanup costs could be.

    BP is simply too risky for me right now. Seems like there are smarter investments to be made.

  • Report this Comment On June 02, 2010, at 7:05 PM, Zaneyjaney wrote:

    Thanks, cadunce, for your tongue in cheek lashing of fire56! You gave refreshing comic relief in a dire situation that should leave partisan rantings out of it.

  • Report this Comment On June 02, 2010, at 7:12 PM, withoutlimits wrote:

    @sundolly. Right on!

    People who invest in unethical scumbags might just as well be funding the gangs that want to sell your kids drugs. Because some of them, Eli Lilly, for example, do sell your kids drugs!

  • Report this Comment On June 02, 2010, at 7:21 PM, srorer wrote:

    Buy BP? Just thinking about it makes me want to run off and take some thorazine. Who knows how long this will go on and what the damages will be?

    Forgetaboutit.

  • Report this Comment On June 02, 2010, at 7:28 PM, john795806 wrote:

    There's still a lot of uncertainty out there, so from an investment point, options are the way to go. I would expect a lot of stock fluctuation going forward.

    The degree of this disaster is unprecedented. Here are some things that could happen:

    A virtual collapse of gulf fishing and tourism.

    Coastal land devaluation (and that stuff's valuable!)

    Fouling of the eastern seaboard.

    Into the Gulf Stream--and onward to who knows where?

    A hurricane (a very serious hurricane season is predicted), fouling more beaches, resulting in more destruction, and slowing down efforts to stop the flow.

    If I were an attorney, I'd be smelling "litigation" in that leaking crude, and finding a lot of creative ways to do it. With so many ways that this can damage so many livelihoods--not even to count the most important loss, that of huge swaths of one of the most productive wetland ecosystems in the USA-- there are more ways to sue those responsible than can be counted. And people are still in the "I can't believe this is happening" stage. Once the leak is plugged, the stock may see a quick jump, but then people will organize, class action suits will be filed, and a long litigation period will throw out there what every investor hates the most--uncertainty. That lengthy uncertainty can unfold for decades, not just due to the suits, but due to the unfolding environmental catastrophe, which can affect things such as seafood stocks for decades.

    One final word of warning: Being from Texas, one of my relatives had a well blowout on a much smaller scale. A relief well was dug--the result being an even bigger blow-out, in spite of the fact that the risks of the formation were known and supposedly accounted for. Is a fix coming in August with relief wells? I wouldn't bet on it.

  • Report this Comment On June 02, 2010, at 7:30 PM, masterN17 wrote:

    I bought more BP this morning, more out of morbid curiosity than anything else. Lowers my cost basis from ~48 to ~40. The only uncertainty is the dividend, and even then it may be cut by half, rather than eliminated altogether. Admittedly, it is a calculated risk, so it is one I am not taking with more than 2% of my portfolio.

  • Report this Comment On June 02, 2010, at 7:33 PM, loanwolfj wrote:

    Just who is going to buy this company without waiting to see just how much damage is done with the summer storms? Only those who believe the drivel being put forth by the paid mouth pieces of the insiders who are slowly unloading before the bottom drops out.

  • Report this Comment On June 02, 2010, at 7:33 PM, buntyp wrote:

    For the average guy/girl, who maybe thinking of widening their 'Portfolio', & looking at Energy Stocks & or Companies, this 'Article' has to be one of the Best, & well Thought-out 'Articles, I have ever read, particularly in view of the 'Circumstances', surrounding the subject Company.

    However, throwing BP under the 'Bus', so to speak, for Political Purposes, does seem to be playing-out, for exactly that 'Purpose'. Isn't there some 'Cat' in the 'White House', who said, & I am paraphrasing his actual quote, something about' Never letting a Good Crisis go to Waste'?

    What to me, is more troubling, is the more recent statement from said 'House', that they intend to push 'Congress' into 'Legislation' concerning ending the so-called 'Tax Breaks', which the Oil Companies, or some of them, now enjoy.

    What effect could this have on those 'Companies', & on the 'Market', for Investors to consider.

    When any move like this is being contemplated, if it's primarily a 'Political Manoeuvre', you can bet that 'Un-intended Consequencies', will only dawn on Govt. in Hindsight.

    If such 'Legislation' was to come into effect, & Govt. started to collect these additional 'Revenues', I don't expect, other than helping to pay interest on Debt., one Dime of that additional Revenue going towards any 'Alternative Energy' programs.

    This is what bothers me, that all kinds of 'Sleight-of-hand' Reasons are being cooked-up, to justify 'Tax Increases', on whomever, to raise the 'DESPERATELY NEEDED CASH' in order to SEVICE DEBT, which they (Govt.), still even at this 'Stage' wants to keep 'MUM', & act as if most Folk don't already know the kind of MESS, in which they (Govt.) find themselves.

  • Report this Comment On June 02, 2010, at 7:42 PM, kmv98finance wrote:

    This one is easy for me. I'll wait until the disaster ends, asses the potential costs, and decide to buy or not then. I'm not going to risk any dollar on BP while the uncertainty around this spill is still so great. However, I will be waiting for an end to this miss and a potential buying opportunity. My advice: don't buy a lottery ticket on this one until your odds of winning are better.

  • Report this Comment On June 02, 2010, at 7:51 PM, btukwh wrote:

    I also looked back at XOM through the Valdez spill and the stock didn't even flinch.

    Why not?

    Valdez might be considered a single occurence caused by a single human performance error.

    BP as mentioned is a repeat offender. A terrible safety record. I remember a power plant we built for them. The refinery exploded not long after due to a safety violation. Texas City. There are others.

    It's the corporate culture that's the problem. It's a safe bet that there will be other accidents in the near future. How do you value that kind of risk?

  • Report this Comment On June 02, 2010, at 7:53 PM, mirtna wrote:

    Given the risks of a possible unequaled environmental dissaster and the highly likely event of significant criminal culpability, I think one would have to see the potential for "transformational profits" to assume the rish that is inherent in a BP investment. There is the potential for ecological disaster along the Gulf, along coast of Florida, the Keys, up along the eastern seaboard. And, this is not just a coastal problem! Food chains and ecology affected from deepwater evirons to shore. I think there is an existential threat to these companies. There was significant negligence involved if not outright criminal culpability in an extreme degree. Somebody needs to hang for this. This disaster has the potential for unequaled consequences and BP stock doesn't over the potential for "transformational profit".

  • Report this Comment On June 02, 2010, at 7:54 PM, holosys wrote:

    Profits from BP (for those buying AFTER the spill) is blood money. Imagine getting rich off the tragedy in Darfur, or like the German investors during the war buying stock in the gas and oven manufacturing companies supplying concentration camps. That stock must have popped when the Fuhrer got productivity reports on his desk. But then again, while this crisis is unfolding, I haven't a doubt BP's executives are sleeping as peacefully as cadavers in their luxurious mausoleums (uh, I mean, mansions).

  • Report this Comment On June 02, 2010, at 7:56 PM, Superdrol wrote:

    With the market correcting over 10%, there are better opportunities. Even the experts/analyst cannot agree on many issues, it is not likely you will do any better. This is not even a decision that requires more than 3 minutes of thinking. If you buy, you are speculating b/c you cannot quantify and value all the parameters.

    Answer= no.

  • Report this Comment On June 02, 2010, at 8:00 PM, ET69 wrote:

    $ 30 billion to cover damages? What are you smokin? This isn't just a bad spill- this is a catastrophe worse than Chernobyl, This is the destruction of an entire ecosystem and a way of life.Fishing , tourism, construction you name , it the entire Gulf will be devastated , including Mexico. An atomic bomb would have been less devastating .If that oil gets out of the gulf stream and into the Atlantic currents you can add the Eastern seaboard to the impacted zones. It is amazing that a lot of people still have their head up their gluteus maximus on the damage done here. If One hurricane comes through entire species could be wiped out. Do you think I am a fear monger or do you JUST NOT GET IT? $30 billion? - that is laughable .BP ought to be nationalized without compensation to pay for this catastrophe. As for the executives --they better watch their back as some justifiably enraged fishermen may just kidnap them and decide to use them for chum!

  • Report this Comment On June 02, 2010, at 8:05 PM, libertarianlib wrote:

    BP needs to be put out of its misery, like an old horse,,,make that a dinosaur.

    It's time to take the $70B in federal fossil fuel subsidies to the oil industry, spent over the last 6 years, and invest taxpayer monies in energy technologies that don't cause $20B disasters and loss of 10-30 lives at a clip, like coal and oil

  • Report this Comment On June 02, 2010, at 8:07 PM, topsecret10 wrote:

    Are you kidding me?? $$#@!%$#@!@!! You have to be out of your !@#@ ing mind to buy this stock at the present time. This company Is the poster child of whats wrong with greedy Investors. Roll the dice at your own risk my fellow fools. There are FAR TOO MANY better buys out their than this one If you want to buy beaten down offshore drillers and others In the Industry. How about (SDRL) at 20 bucks,and a 10% dividend. Seadrill has exactly ONE RIG In the gulf of Mexico,yet their stock has been hammered. BUY SEADRILL all day long under 22 bucks.... TS

  • Report this Comment On June 02, 2010, at 8:19 PM, getindachoppa wrote:

    Regarding Exxon's 930% gain from the time of the Valdez spill to today, crude oil was in the $18.00/bbl range in 1989, vs $70.00 range today. Will crude go up to $250.00.bbl for a similar win with BP? I doubt it, because if it does we're all going to have bigger problems than just our stock portfolios.

  • Report this Comment On June 02, 2010, at 8:21 PM, jerryguru69 wrote:

    Sure. Buy on the rumor (whether or not it will seal the leak, and how much it might cost), sell on the news.

  • Report this Comment On June 02, 2010, at 8:45 PM, aptosjoe wrote:

    In the idustry BP has a rep for ignoring safety in favor of the bottom line. In this particular case I was told that BP was aware of a number of issues but chose to ignore them because of production dead lines, even to the extent of telling on site reps that BP would assume full responsibility.

    Given this I think your worst case senario is very likely. I think I'd wait for the shoes to drop before considering BP.

  • Report this Comment On June 02, 2010, at 9:44 PM, thidmark wrote:

    It will be interesting to see what happens with the dividend. Congress' saber-rattling is a concern. However, this is a significant portion of people's pensions, especially in the UK. BP might rightly fear angry shareholders more.

    I jumped in too early thinking it wouldn't be worse than Valdez. Oops. I'm on the fence about adding more shares. I think it might fall more, especially if the latest fix doesn't work.

  • Report this Comment On June 02, 2010, at 9:56 PM, 78rpm wrote:

    We usually try to invest in companies that are well managed. BP's CEO has made major public relations blunders like saying "I want my life back" and by saying workers on the spill felt sick because of food poisoning. He sounds like a store clerk who tells a customer "Don't ask me. I just work here."

    Let's not compare the economic liability with Exxon Valdez. That happened in an area far less populated than the Gulf -- and the damage is already more serious and getting worse. BP won't be worth its logo in a few years.

    Besides, I cannot conscientiously invest in a company whose leadership exhibits such callous lack of concern for its damage.

  • Report this Comment On June 02, 2010, at 10:01 PM, Posaune641 wrote:

    Matt - this is a tragedy of enormous scale. Why are you weighing the pro's and con's of this companies stock potential? Hopefully BP, and the rest of the bunch that have demonstrated criminal actions with their lack of preventative measures, will see their fortunes and market shares disappear - much like the Gulf eco-system that they are in the midst of destroying. What you're writing is a display of greed based, no holds barred, capitalism at its disgusting worst. Please gain some perspective.

  • Report this Comment On June 02, 2010, at 10:24 PM, Reddrummer wrote:

    Posauane - He runs a site about stocks and BP is currently the most talked about stocks, of course he is going to write about it. Just step back, take a deep breath and remember that BP was not the only guilty party. Yes they owned the well and are the most liable, but RIG, CAM, and HAL played their part as well. Oh yea, and that amazing government of ours was right there as well, Norway and Brazil had more safety requirements.

    If you dont feel right investing in BP, then by all means dont, but what you want is revenge. So just take a few deep breaths.

    Also, 78rpm, about that comment the CEO made where he said "I want my life back". The man has probably been working 100+ hour weeks since the explosion, of course he wants his life back. I am sure he wants that hole plugged up as much as anyone.

  • Report this Comment On June 02, 2010, at 10:25 PM, swiver wrote:

    I rarely write on these sites but;

    1. BP (originally the Anglo Iranian Oil Company)bought a company called AMOCO to get into the US market, and (in my oppinion) bought a poke without even a pig in it. I have never believed that they did enough due dilligence on that, and when the refinery in TX City had its problem, I think a lot of people might have predicted it.

    2. The pipeline in Alaska had failures because the corrosion as of a type that was not found until BP hired some sophisticated ultrasonic technology to find it (after the events, of course). See the ASNT paper on this.

    3. BP has the Thunderhorse problem, where the rig nearly tipped over, and that of course was their own problem.

    4. This present problem covers BP themselves, and their suppliers, and some (obviously) bad decisions. It has resulted in the MMS being broken up. The suppliers (Transocean, Cameron, and HES) are all well known and well respected companies within the oil/gas industries. All try to do a good job within the framework of industry standards (MMS, API). It should therefore come as no surprise that the financial pressure to produce might be at the bottom of this.

    Having been in the oil industry since 1978, (anyone remember the Oil and Gas 500) I used to joke that oil companies would eventually end up as 2 lawyers and 2 MBAs, and damn the engineers. Maybe we are there now.

    As someone who works in this industry, I feel that there is a great need for more consulting and control by senior engineering staff over these projects. What will come out of this disaster is a need for more reglation. We are hearing this. Who will be qualified to regulate, when standards in USA are written to the lowest common denominator? (I have sat on ASTM and API committees, and chair an API committee today). Is there anyone in Wasshington who can write legislation for this. I think not.

  • Report this Comment On June 02, 2010, at 10:41 PM, jimmcross wrote:

    Is anybody seriously considering buying BP stock at this price?? I'm a relative novice to investing and I know--if you dont mind "blood money," --that BP Stock is going to surely sink lower. Unless your short selling BP. Have patience and buy it at the bottom. Which will be probably the exact day we finally hear some solid good news in the gulf disaster.

  • Report this Comment On June 02, 2010, at 10:41 PM, bebop111 wrote:

    I wonder if MF would have recommended an investment in Grünenthal in the late 50's and early 60's. The point is that principled people will draw a line somewhere, and just because "far more readers would like to see Goldman tarred and feathered" than BP is a pretty bad rationale for buying the latter. You may not be immoral in your stock purchases, but your stance on this issue, at least, looks very close to amoral.

  • Report this Comment On June 02, 2010, at 10:50 PM, TMFKopp wrote:

    I appreciate all of the comments and I can definitely understand the strong emotions involved in this situation.

    I will point out, though, that we do at least pretend to believe in a legal system that says "innocent until proven guilty." Does BP have a sparkling track record? No. But as far as this spill is concerned I don't believe there's been any evidence found yet that proves BP made criminally negligent decisions.

    Perhaps that will be proved, or perhaps 20/20 hindsight will convince people that normal industry actions were really criminal behavior. I don't know... I don't have any more of that inside information than anyone else outside the company.

    What I do know is that we live in a world where there is a significant amount of complexity involved in many things that we do. Perhaps this was primarily the result of the fact that drilling a mile under the ocean is a mind-bending undertaking where even small problems/oversights/glitches can lead to disaster.

    BP isn't going to be able to claim sovereign immunity like Pemex did in '79 and it doesn't look like it's going to put up a fight about paying up as Exxon did after Valdez. If the company has the wherewithal to pay for the damages -- which, again, I believe it does -- that's at least a bright spot in this horrible situation. Had this been a smaller player, bankruptcy would have likely been the only option and clean-up and damage compensation would have been left to... [fill in the blank]

    The spill is a terrible thing and there's no two ways about that. And if BP is found to be criminal than my appetite for it's stock will vanish. But until then, this looks to me like a terrible accident that will cost BP a lot of money, but not nearly as much money as the market seems to think.

    Matt

  • Report this Comment On June 02, 2010, at 10:54 PM, bebop111 wrote:

    Thank you for an excellent post, Posaune.

  • Report this Comment On June 02, 2010, at 10:55 PM, voelkels wrote:

    FWIW, I sold BP on May 10th. I should have sold 30 days sooner, me. Back in the late 1980s, Exxon had an oil spill that had an impact on a few thousand people in Alaska. It cost them billions to clean up, etc., etc. 20 some years later, their stock is up some 930% compared to S&P’s 271% gain. The question to ask is what is Exxon’s stock price compared to other major oil companies at that time, 2 years after their spill, 5 years after and 8 or 7 years after, huuuggh?

    Instead of comparing Exxon to the S&P, compare it to Chevron, Mobil, Phillips Petroleum, Texaco, Murphy oil, etc., etc. Now then, BP has caused an oil spill that will impact millions of people living around the Mexican Gulf, will probably go on for more months until the well is finally killed and capped, will take many months or even a year or two to clean up and the environmental damage will last for more than a few years (decades?). It will cost them many Billions in direct cleanup plus who knows how much in litigation and fines.

    Is BP a buy? IMHO, I wouldn’t touch them with a 12-foot Hungarian, never mind a 10-foot Pole, no. Maybe in 7 or 6 years . . . .

    C.J.V. - if I live dat long I may look at dem in 8 or 7 years, me

  • Report this Comment On June 02, 2010, at 10:56 PM, Superdrol wrote:

    BP is self insured so they do not have counter party insurance. I dont have an opinion on blood money. Dont care to be honest. Every company has ita skeletons and it is beyond the topic at hand. 

    The author neglected to mention WR Grace ticker: GRA. During their asbestos contamination of two cities that company was effectively ripped apart and wemt bankrupt. Look it up. 

    BP isnt just contaminating cities they are contaminating states and regions. Again if BP is the best stock you can come up with after a 10% correction that's just pathetic. 

  • Report this Comment On June 02, 2010, at 11:04 PM, prophetofomaha wrote:

    I was reading above about BP's corporate culture being that of a serial offender. If you have not viewed this video yet, please do so:

    http://www.treehugger.com/files/2010/06/jon-stewart-blasts-b...

    This type of thing eventually catches up to you and in BP's case, it's time to pay up big time. And I'm sure every time Tony Hayward opens his mouth, the stock drops another 10%. Investors should pray they lock this guy up in a hole somewhere.

    I'd stay away and shop elsewhere.

  • Report this Comment On June 02, 2010, at 11:08 PM, Superdrol wrote:

    My comments didn't format correctly but WR Grace went bankrupt and was ripped apart due to asbestos related issues. BP is not bulletproof and whether they have thr financial capacity is pure speculation. No one knows, not even experts. This is worse than trading. At least in trading you can define your risk. Here is pure gambling. Let's call it what it is.

  • Report this Comment On June 02, 2010, at 11:17 PM, Alg0rhythm wrote:

    Matt- I got a bridge in brooklyn I'm sellin, dirt cheap...it's got thirty years left in it, but I'll sell it to you for 1 years revenue cuz I gotta skip town...

    Better yet, poker game's at my house.

    Buy BP? I'm going to wait for the bankruptcy sale. There's already people in Louisana claming sick... and they haven't stopped the spill yet.

    Texas and florida have electoral votes and Obama is going to need a sacrifice, even if BP doesn't deserve the walloping it's going to get , which it does.

    Instead of buying BP, donate to charity..at least get a tax deduction for money you'll never see again.

  • Report this Comment On June 02, 2010, at 11:22 PM, TMFKopp wrote:

    @Superdrol

    On WR Grace, your point is taken -- survival isn't guaranteed after a major incident.

    However, it's worth noting that WR Grace didn't have nearly the earnings power that BP does, nor did it have the balance sheet strength. There was only one year between 1995 and 2000 where WR reported positive free cash flow. The last time BP was free cash flow negative was 1998.

    Matt

  • Report this Comment On June 02, 2010, at 11:36 PM, Montereyjackson wrote:

    Here's is a bolt-on to Superdrol's good point. In a tough situation, investing in the company with the best practices, management and culture is one way to get the gambling element out of one's stock-buying. My study indicates that company is Exxon. If their price is too high to allow a decent return, why not take a discipline pill and not buy anything? (And at 60, it may not be too high...)

  • Report this Comment On June 02, 2010, at 11:52 PM, jfpearsonXX wrote:

    Just a note to puckplayer4, should you live anywhere near Beaumont or Baytown, TX or Baton Rouge, LA - you're probably buying gas or diesel that XOM refined. No matter what the sign says, it's fuel that XOM refined from crude they bought on the open market (perhaps months before).

  • Report this Comment On June 02, 2010, at 11:56 PM, topsecret10 wrote:

    Run far and run fast.......... TS

  • Report this Comment On June 02, 2010, at 11:56 PM, joesstuff77 wrote:

    I think it's very telling of a society when some can look the other way as unimaginable greed and criminal negligence is committed for, say 7% profit on an investment? People are loosing everything they have in Gulf States as we speak and the perfect storm of negligible by government oversight could very well allow BP to get off without a whole lot in the way of responsibility. I think that if you teach your children 'hey, if it makes a profit who cares?' then they should be able to use the same logic to justify selling YOUR body parts when you're bed-ridden in a rest home!

  • Report this Comment On June 02, 2010, at 11:57 PM, awallejr wrote:

    Why gamble with BP when other integrateds are just as enticing without BPs liability? If you are tempted with BP, you should be buying TOT. No real GOM exposure. A soild dividend. Tons of cash. Selling at a price when oil was selling in the $30s.

  • Report this Comment On June 02, 2010, at 11:57 PM, topsecret10 wrote:

    If the stock holds above decade (s) lows of 35 bucks,It may be worth a look. Any close below this number and ALL bets are off..... TS

  • Report this Comment On June 03, 2010, at 12:17 AM, Superdrol wrote:

    BP free cash flow appears to only have covered 5 out of the past 10 years solely for their dividends of 10.5 billion. Last I checked they had alittle over 6 billion in cash and approx. 36 billion in liabilities which they are probably paying 5-6% interest on. I'm sure at this point any future bond offering the market will command a higher interest rate in lieu of this on google crisis. Combine that with 1 billion already spent in just or month and they have not even stopped the leak yet.

    This is also assuming oil prices and demand stay relatively elevated and they don't have any Government contracts taken away to continue to support their overall revenues. Combine this with the steady increasing capital expenditures and suddenly BP coats start to really add up. 1 billion to zip through in about one month is a lot of money.

    They are decent financially but nothing like Apple with 40 billion in cash , no debt , and little capital expenditures. And no problems with oil spills.

    My off the cuff guess is that the total will easily exceed 10 billion no less and even potentially more than that.

    I don't think they will go bankrupt over this but I do believe the dividend will be affected in some way. It is hard to believe they will continue to pay that.

  • Report this Comment On June 03, 2010, at 12:21 AM, Superdrol wrote:

    I'm all good for trading the stock via technical analysis but I just do not believe BP plc is a legitimate investment.

    I'd buy Goldman Sachs any day over BP.

  • Report this Comment On June 03, 2010, at 1:27 AM, mirtna wrote:

    Uhhhhhhh, does anyone remember a comment in a WSJ article that claimed BP management was celebrating a lack of downtime caused by accidents as the accident happened? Not that they were celebrating a lack of accidents, but that they were celebrating lack of downtime from accidents. Pay $500k to $ 1 mill per day for an operation and see where your incentive goes to stop and check and place caution as priority. I wonder what kind of bonuses were attached to "lack of downtime". Somebody needs to hang.........

  • Report this Comment On June 03, 2010, at 3:15 AM, TMFKopp wrote:

    @Superdrol

    "36 billion in liabilities which they are probably paying 5-6% interest on."

    As I noted in the article, BP's current borrowing costs are actually a lot lower than that. Much of their U.S. debt is in floating rate notes which, as of YE 2009, they were paying 1% on.

    That doesn't mean they'll get as sweet of a deal for new debt though, particularly given the default swap action.

    "BP free cash flow appears to only have covered 5 out of the past 10 years solely for their dividends of 10.5 billion."

    While it's great when cash flow from operations covers both capex and dividends, it's not all that unusual for debt to be used to fund capex -- particularly when it comes to refining assets.

    "They are decent financially but nothing like Apple with 40 billion in cash , no debt , and little capital expenditures. And no problems with oil spills. "

    Not sure how Apple wriggled its way into the conversation, but you're comparing, um, apples and Buicks. Apple is a surging growth company with a forward P/E of 20. BP is a distressed oil and gas major with a forward P/E of 6.

    And don't get me started on Apple and its cash position, that's a surefire way for me to tick you off :)

    Matt

  • Report this Comment On June 03, 2010, at 3:49 AM, blackmonday2007 wrote:

    BP looks tricky I'd play the ERX 3X ETF 5 downside risk 24 upside

  • Report this Comment On June 03, 2010, at 6:04 AM, Xrat wrote:

    Enjoyed the article, enjoyed the comments.

    There seem to be a few in the industry out there, can anyone tell me why..., since there seems to be an inevitability that a tanker or well will eventually leak. Why has the industry not been prepared with a 'plan B'?

    Perhaps a large system of floats with a linked skirt beneath, which could circle a disaster contain some of the spill and have tankers suck the surface layer off. It has to be cheaper than an Apollo mission!

  • Report this Comment On June 03, 2010, at 8:35 AM, trulinxsc wrote:

    Paraphrasing Baron Rothschild... "Buy when there's oil in the seas, even if the oil is your own". That having been said, there is more oil yet to pour into the sea.

    As for me, I am saving cash and will buy a couple days after BP announces the slashing of their dividend.

  • Report this Comment On June 03, 2010, at 8:36 AM, tprice8558 wrote:

    I am thoroughly disappointed with BP's efforts thus far. I believe oil recovery has been their primary focus up to now. Last week after 40+ days of leaking, and a failed attempt at capping, the CEO stated that BP will have to "double down" the efforts in the wake of the failure. "DOUBLE DOWN"? After 40+ days?

    Will BP survive? Yes. Why? Because Americans invest similar to how they gamble in Vegas. Big gains can be realized by placing risky bets. Small gains are boring.

  • Report this Comment On June 03, 2010, at 9:37 AM, summertimeVA wrote:

    I would buy Total over BP any day! BP price targets are much lower than Total and the risk associated with BP is way way higher. The Fool or others who are buying BP to cut their losses which does not mean that we have to buy BP when we can buy stocks with higher upside like Total to name 1. What's amazing is that Total has lost ~ 23% year to day making it a terrific buy. Taking today's price I am willing to bet year end Total, Best Buy, Baidu, Halliburton, Mattel to name a few would have earned a higher return plus less stress.

  • Report this Comment On June 03, 2010, at 9:51 AM, netskater wrote:

    The chips are starting to fall. Fitch, a premier credit rating agency has cut BP from AA+ to AA. I think this is just the beginning. The author's entire argument is based on the fact that BP will be able to get cheap debt to payoff its short term obligations. However the liability can greatly increase if BP loses its good credit standing.

    BP is nowhere close to resolving the leak and class-action lawyers are loading up their guns to open major liability lawsuits against the firm. Obama and the democrats will also have to make the right kind of noises (read criminal/civil lawsuits) in order to salvage some political capital which has greatly eroded the past few weeks

    In the short-run, it will be good to stay out of these muddy waters or buy Puts three months out. The Puts are nicely priced and are moving up everyday.

    At the very least, I see BP cutting their dividend which will immediately impact the stock price. And there will be further downward pressure on the stock as the $ value of total cost/damages starts firming up.

  • Report this Comment On June 03, 2010, at 9:51 AM, keddie1 wrote:

    A few points that I believe need to be included in the analysis.

    First, your article says that BP "will willingly pay for cleanup costs and damages". Hmmm... no.... I believe they are meticulously using the term "all legitimate claims". When pressed as to what the term “legitimate” means BP responded with “as per the law and regulations.” That feels like an immense highly costly legal battle. Although Exxon went down a similar path.

    Second, it is not clear if BP will have to fight the legal challenges one by one, or as a single action. Big difference in cost.

    Third, many of the Fools have already brought this up – there are really two disasters going on here. 1.) The original incident and sinking of the Horizon leading to the leak, and 2.) BP’s ability to continue to shoot itself in the foot on an almost daily basis. BP has rather low credibility, perhaps less than congress or the banks for a while. This brings negative downward pressure on the stock price.

    Fourth, actions speak louder than words – while BP is stating that it will engage in” altruistic actions for the good of those involved”, its actions are starting to appear more like those of a professional shoplifter. Professional shoplifters are aware of the presence and position of security people, store employees, cameras, and so forth. They specialize in appearing to be in the act of normal everyday shopping activity while engaging in very talented illusions and misdirection. In other words they are not what they appear to be. BP might be taking on some of these characteristics. There is plenty of this in the news, no need to go into here. The point being this is fueling the outrage which will put negative pressure on the stock. It may have a ways yet to fall.

    Fifth – no one knows just what direction the drilling ban will take, as well as other actions being rolled out in the last few days. Is this an accident or is it negligence or even criminal? This can change BP’s liability by an order of magnitude.

    Finally, the end game can only begin once the relief wells come in. Relief wells do work, but not always on the first, or the second or even the third attempt. Check up on the Montera spill in Australia and the 1979 spill in the GoM. In both cases multiple relief wells were required. Four or five attempts to achieve success is fairly common. BP has no luck here. They’ve used it all up. If they don’t get it with these first two relief wells then it is another three months for the next two… and another three months for the next… and so on. There is an outside chance this event can continue until Christmas.

    I think your article is a bit too optimistic. But for the sake of the Gulf Coast residents, the sea and its creatures, and the BP employees who are working their collective butts off to overcome their managers’ horrendous mistake and deplorable judgment – I HOPE YOU ARE RIGHT.

  • Report this Comment On June 03, 2010, at 9:53 AM, mhonarvar wrote:

    Cap and trade is anything but socialist.........Cap and trade simply makes Pollution another Commodity that can be traded for profit...sounds exactly like good old capitalism to me.

  • Report this Comment On June 03, 2010, at 11:25 AM, park94 wrote:

    Bp is a screaming Buh Bye.

    Maybe Obama and the whole govt. is too corrupt and cozy with oil companies to do anything. But public pressures and BP's ineptness in dealing with this issue will make the company accountable for the damages.

  • Report this Comment On June 03, 2010, at 12:50 PM, GreatestPakiQB wrote:

    Great analysis. I think you did an amazing job of laying out the postives and negatives associated with BP, and then forming an investment thesis based on this info.

    I esp loved the great bit of reporting that BP owns a 65% interest, not all of it. Something, I think, most people are unaware of (including myself). BP, Anadarko Petroleum, Mitsui, Transocean, Halliburton and Cameron will all deserve the punshiments that are dolled out.

    I went ahead and purchased shares of BP after reading your article.

  • Report this Comment On June 03, 2010, at 1:55 PM, Swoop1918 wrote:

    BP is a serial safety offender -- this isn't their first disaster, and there's no reason to believe it will be their last. And they've handled the situation with pure idiocy -- lying about the amount of the spill and putting the CEO on TV to whimper about getting his life back. It's a stock only for traders and buyout speculators at this point. As a long-term investor, I'm looking at good companies that have been similarly hammered by this accident, like RIG and APC. I predicted right after the spill that RIG would drop below 50 and even re-test its two-years lows (around 42), and I still believe that. And at those levels, I'll be buying, because a good company at half off is a great investment. A bad company like BP at half off is a crapshoot.

  • Report this Comment On June 03, 2010, at 3:28 PM, plange01 wrote:

    bp is a buy, massey is a real good buy and goldman most likely will be shut down. either way its garbage!!

  • Report this Comment On June 03, 2010, at 4:02 PM, doehl1 wrote:

    I can't believe this happened to BP.

    I work in the power generation and oil and gas industries as an independent consultant and have worked for years for all of the major multinational oil companies (BP, Shell, Exxon Mobil, etc). Any post stating that BP has a culture of neglect or pattern of irresponsibility doesn't know the company. Prior to working for one of the oil companies or even stepping foot on one of their operations, extensive training on operations, safety, and site specific orientations are required. These are a necessary and incredibly expensive part of life in the oilfield which are universally and constantly critiqued by all who have to participate in them at one time or another. However, BP takes it to another whole other level.

    In the past six months I have been on two of their installations and I can attest that no one takes safety, operations permitting, and procedural documentation more serious than BP. On a recent assignment, I spent 2-1/2 full days of training (one day for workplace safety and one day for H2S in addition to another half day of site specific training) for a trip only totalling five days--for which BP paid for all of it. That is 50% of my total billable rate went to training me on BP's safety and other procedures. Of the oil-well road warriors out there bouncing from company to company, BP has a well known reputation of being the strictest, most consistent, and regimented of the multinationals out there. No one, in my opinion, takes safety procedures as seriously as they do.

    Why did this (and other recent tragedies) happen to BP? No one can answer that until the final root cause analyses are complete, however, it certainly doesn't seen to be a cuture of negligence.

    For reference, I don't own the stock. I sold it over six months ago because I wasn't satisfied by its performance.

    I just have seen so much "whipping boy" coverage in the media, and other posts jumping on the bandwagon making comments that are just not substantiated or consistent with the way I have seen this company operate over the years.

  • Report this Comment On June 03, 2010, at 4:34 PM, kedo76 wrote:

    Looove making that much money in one day. Now just need to see if this latest effort to cap is successful for even more tomorrow or sell tomorrow morning and lock 'em in. Hope all of you making your principled stances against BP's OSHA violations are good; I'm sure you are.

  • Report this Comment On June 03, 2010, at 5:22 PM, Morpheus2010 wrote:

    For the following investors: kedo76 jigar34 Curmudgeon44.

    This is still new to me. Statements here will be short and brief.

    After BP's huge stock decline after April 20, 2010 ($60.48/share) to todays closing at $39.27/share appears to be a good buy. Like what Curmudgeon44 says this could cost BP more cash for the clean up. This in turn could bring the stock down further before it goes up --- right? This being the case, is it better to buy both long term Put and Call Options? This way we make money in any up or down situation.

  • Report this Comment On June 03, 2010, at 6:53 PM, GreatestPakiQB wrote:

    NEW YORK (CNNMoney.com) -- The Obama administration has sent a $69 million bill to BP for the U.S. government's efforts to help deal with the energy company's oil spill in the Gulf of Mexico.

    The bill was sent to "other responsible parties" in addition to BP, according to the Deepwater Horizon Unified Command, which is the government and industry task force managing the spill response.

    The Obama administration will bill BP regularly for costs related to the spill.

    The current $69 million bill accounts for 75% of what BP owes to date, and the company has until July 1 to pay the full amount, an administration official said Thursday.

  • Report this Comment On June 03, 2010, at 7:03 PM, rhileman wrote:

    BP should be a buy, but the reason it is at its current price is fear of the political reaction, the extent of which is unknown, and the actual cost to Bp of cleanup, the size of which is also completely unknown. Actually, so far as I know there is no present evidence that BP is at "fault" in this at all, in any honest sense of the word. It is not known that BP cut any corners on the current state of the art of deepwater drilling--an inherently disastrous undertaking. Some number of disasters are going to happen in deepwater drilling, just as some number of airplanes continue to fall from the skies, no matter what the level of precautions taken. I don't live in a gulf state, and I sympathize with the people more directly affected, but I would rather risk the occasional blowout than fight wars in the Middle East. The most important thing relating to this that Americans should be worried about is becoming energy independent of the Middle East. The only thing the public and the government should be concerned about in this case is how the industry and government can lower the risk from future blowouts, and figure out ways to contain them and clean up the oil faster. As for cutting the dividend, I don't know what legal authority congress would have to compel that, but it certainly wouldn't be fair to shareholders, who are no more responsible for this than anybody who's ever put gas in his car. If the costs actually mount to the point that BP is forced to cut its dividend, so be it, but let's wait and see. In the meantime, congress should try to figure out what it can do to improve BP's profits so that it will have even deeper pockets for meeting whatever the costs turn out to be.

  • Report this Comment On June 03, 2010, at 7:36 PM, Superdrol wrote:

    BP plc looks like it has the potential for a gap fill.

    Massey Energy looks like it is putting in a slanted head and shoulders pattern.

  • Report this Comment On June 03, 2010, at 8:05 PM, hawkise wrote:

    I live on the Gulf Coast

    I bought south of 39

    I'll probably buy some Real Estate

    No I do not like BP but these clowns who did not follow the 7Ps

    Previous

    Proper

    Planning

    Prevents

    Pathetic

    Poor

    Performance

    But I will make some money off of them since they screwed my fun job.

  • Report this Comment On June 03, 2010, at 10:49 PM, MeTwit wrote:

    BP? I would rather go to Vegus!

  • Report this Comment On June 04, 2010, at 12:17 AM, stan8331 wrote:

    It escapes me how anyone can claim to know that BP has the financial wherewithal to survive this disaster, when absolutely NOBODY knows what the extent of the damage will eventually be. BP probably does have enough capital to handle complete devastation of the Louisiana and Alabama coastlines. However, when you bring Florida and possibly the entire east coast of the U.S. into the picture, no company in the friggin' world has that level of resources. I can guarantee you that if Florida's coastline is ruined, nobody in their right mind will be lining up to lend money to BP, at any price.

    You might think your ace in the hole is that the Supreme Court will let BP off the hook, as they did with Exxon. That's a strong possibility so long as we're only talking about Louisiana and Alabama, but Florida is NOT Louisiana and it's darn sure not Alaska. If Florida's coastline and part of the east coast is wrecked by this spill and we see massive job losses as a result, not to mention not to mention picture after nauseating picture of oil-fouled wildlife, and knowing that BP was not an innocent bystander in the disaster (there's no chance for them to claim that RIG personnel fell asleep at the wheel), I can't imagine a scenario in which any sane politician would vote to protect BP from the millions of voters impacted by this event.

    I'm not saying that it's impossible for BP to survive this. If the oil dissipates or migrates out to the open ocean and coastal devastation is less than what we know is possible, they certainly could. But I stand by my earlier statement - buying BP stock right now is playing Russian Roulette - and your BEST-case scenario is there's only one bullet in the gun.

  • Report this Comment On June 04, 2010, at 1:06 PM, markofzorro wrote:

    BP is a bad deal. Let me give you two concrete examples of bad buys I made:

    1. MELA, which makes melanoma test kits. I bought it on the recommendation of financial types. Later, I reviewed the one PR release from this secretive start up. It turns out the test is worthless for screening for melanoma and may only give a small marginal increase over clinical judgment -- hardly an indicator of success. Moreover, the business model is based on greedy doctors buying machines and supplies from MELA and then sticking it to insurance companies.

    In this environment, I can't imagine an insurance company paying for it when biopsy is benign, the gold standard, and may cure the tumor, probably for less money than MelaTest.

    I sold at a loss, even though other suckers may bid it up if it gets FDA approval.

    2. I sold puts on Moody's with serious reservations on the principle that greedy financial firms will continue to dominate the government and blow off the taxpayers. I have a bad feeling on this, but will hold on for the ride and hold my nose.

    There's blood in the streets with BP, just as there was at the end of the Wiemar Republic.

  • Report this Comment On June 04, 2010, at 1:15 PM, hans1059 wrote:

    I thought fools had something with fundamentals, like quality management.

    BP management has shown to be utterly below average on this one. In the quality of the work as such, but even more in the (verbal) response to the calamity. I remember at some point not knowing whether to laugh or cry.

    For me mr. Koppenheffer puts his mouth where his money is. I will not pay any more attention to his writings.

  • Report this Comment On June 04, 2010, at 1:25 PM, vicweast wrote:

    I wouldn't touch BP with a 10 foot pole until we understood what the damages will be. The downside for the company includes the real possibility for utter loss of value, and there are several paths to get there.

    1) The use by BP of dispersants is quickly looking like a fiasco. The initial optics of not seeing giant oil on the surface had appeal to the company, but the down side with dispersants is that the oil actually still washes up on shore and in a far more virile manner -- choking the soil and turning it anerobic: a disaster of huge scope and with huge possible costs associated. Also, the chemistry of these dispersants used in the way they were (released underwater as well as at the surface) has not been seen at scale. We do not know what potentially larger ecological disaster may be associated with these chemicals.

    2) It is becoming clear that BP invested nearly nothing toward any substantial cleanup/containment. In cleanup, they have been less than ineffective and the contrast between their investment in drilling technology and science is billions more than they have invested in containment and cleanup. In fact, they did not even attempt the effective strategy the Saudis used whereby they encircled their Saudi leak with supertankers and sucked oil/seawater out of the sea. WHy did BP not use this to at least gather some oil in proximity to the spill?

    3) Given the incoherent statements by their CEO on numerous occasions BP has undermined what little PR damage control they might have achieved had they appeared to be genuinely and meaningfully devastated by the consequences of the spill. I did not see the shareholder meeting today, but even the fact that it was a shareholder meeting versus a larger public meeting speaks volumes.

    4) The eventual costs associated with this spill appear to exceed the Gulf region, translating into the possibility of financial damages well past Florida and Cuba in the Caribbean/Atlantic and possibly all the way up the northern and eastern reaches of the Atlantic Gulf Stream. These could be felt for years. And then there is Mexico and the southern reaches of the Gulf itself. It is completely conceivable that cleanup and damage costs could be a multiple of BPs earnings for not only one but multiple years.

    5) Finally, there are the criminal issues the DOJ has announced this past week. I'm certain that there will be immense fines of various forms.

    Why would you invest in a company that is expected to be financially liable to this extent?

    And most importantly: WHy would ANY investor invest in a company that is a serial misfeasor after such a disaster at this scale? There are limits to the ethics of investing here that each investor really should consider.

  • Report this Comment On June 04, 2010, at 1:33 PM, ifool100 wrote:

    Financial risk: Simply the basic fine for BP, based on a single clause in the Clean Water Act that stipulates the fine amount per barrel, is about $10.7 billion so far. This does not include Tort lawsuits, civil and criminal penalties and other liabilities. This is why BP is seeking to minimize coverage of the actual barrels released. Leadership: Tony Hayward has made comments ranging from misleading to outright lies - a sign of incompetent leadership. Comments such as "It's a very big ocean" to downplay the spill and "I want my life back", when 11 men have died do not indicate competent, in-tune leadership. It appears to me that the CEO has intentionally misled and shows no real remorse. In short, the CEO does not get it. That's risky. Finally, corporate culture is based on it's history. BP's history includes a culture of cutting corners on safety for profits. With 760 OSHA violations - more than any other oil company - it has a history of mistakes. Just as it takes a long time to turn a supertanker, it will take a long time to turn this beast into the kind of company I would consider investing in. Morally: As an American who dearly loves his country, the actions of BP have made it apparent that they do not care about me or my country. BP has done this to all of us, a direct result of their own deliberate negligence, that will effect us for a lifetime.

  • Report this Comment On June 04, 2010, at 1:48 PM, NonnoDoug wrote:

    Buy disasters: Morton Thiokol when the Challenger blew up, Dow Chemical after the Bophol leak are other examples. Oh, I forgot, the age of oil is over. Sorry.

  • Report this Comment On June 04, 2010, at 1:48 PM, vicweast wrote:

    To speak plainly: It is highly likely that the magnitude of this spill coupled with the totality of BPs responses and preceeding actions will kill the company.

  • Report this Comment On June 04, 2010, at 1:50 PM, vicweast wrote:

    To speak more plainly: BPs actions to date would be best rewarded by killing the company.

  • Report this Comment On June 04, 2010, at 2:00 PM, sept2749 wrote:

    I don't know what BP will really be worth at the end of the day due to the great amount of damage they have done. Personally, I wouldn't invest in BP at any price. These spills must stop or we are going to lose our planet. I'd give money to the cigarette companies before BP. It's that bad! Cigarettes won't ruin our planets - oil spills will!

  • Report this Comment On June 04, 2010, at 2:32 PM, fool425 wrote:

    "I can't help wondering whether he'll (Obama) see this as a public-sentiment slam dunk and use BP as a whipping boy" You mean like the time his predecessor used our anger at the Saudi terrorists who flew planes into the World Trade buildings to justify a misguided war against the Iraqis, misunderestimated the relationship between Shiite and Sunni Muslims, strengthen Iran's influence over their neighbors, and bankrupted our economy to the tune of a few trillion dollars for our sons and daughters to pay? Not to mention the 4400 U.S. deaths and counting. You mean like that?

  • Report this Comment On June 04, 2010, at 2:39 PM, kally22350 wrote:

    At least BP has some basic ethics, unlike your great American company, Union Carbide, which caused 16,000 deaths, created a toxic holocaust and paid out a pittance, but of course it was not Americans that were affected was it!

    http://www.google.co.uk/images?hl=en&q=union+carbide+bho...

  • Report this Comment On June 04, 2010, at 2:45 PM, TheGleep wrote:

    Any comparisons of the current spill to the Exxon Valdez or the Texas City fire are irrelevant. The gusher in the Gulf is an ONGOING disaster, whereas the tanker spill in Alaska and the refinery fire were discrete incidents. Even a natural calamity like Katrina is over once the wind stops blowing; the rest is just cleanup.

    To not underestimate the possibility that Obama will take extralegal vengeance on BP if it furthers his political agenda. If you don't think he can get away with extralegal action, talk to the Chrysler bondholders.

    I owned BP before the spill, and bought more on the way down. However, given the ongoing nature of the disaster and the rising cries for BP's blood, I have significantly reduced my investment...at a singificant loss, I might add.

  • Report this Comment On June 04, 2010, at 2:47 PM, mj2boogie wrote:

    I believe BP is a good buy right now. I bought BP on 6/1 at $37.25. In fact, I think buying BP, RIG, HAL, CAM, and APC all would be good buys at this time - by my quick calculation, combined they have lost over $100B in market cap. The costs will be nowhere near that, no matter how pissed off people are. Just my opinion, but having bought BP already, I'm looking to add RIG and HAL at least.

    Mark

  • Report this Comment On June 04, 2010, at 2:49 PM, WahooJim wrote:

    keddie1,

    If the relief wells do not intersect the original wellbore, it will absolutely not take another two months to make more attempts. The bottom 1000' or so of the relief wellbore will be plugged back with cement and "kicked off" in the proper direction to try again to intersect the original bore. Each plugback and redrill will take a few days at the most. Please don't pontificate about things you don't understand.

  • Report this Comment On June 04, 2010, at 3:03 PM, AxHandle wrote:

    I do not think this is the worst environmental disaster ever. I immediately think of the Bhopal diaster at the Union Carbide plant in India http://en.wikipedia.org/wiki/Bhopal_disaster thousdands killed.

    Whether or not BP is good buy right now depends on whether they can stop the leak, and how far in teh future that occurs.

  • Report this Comment On June 04, 2010, at 3:12 PM, InvestmentRep wrote:

    I'm waiting until the BP stock plunges a little further to buy it, my verdict would be buy in a couple months. Why? because at the moment BP is dealing with a crisis and Obama just handed them a $68 million bill for clean up, and the costs will only increase for BP. But they are a giant, and in a few months they will be right back on their feet again, even after this disaster. In the meantime I'm investing in gold, it's a great way to grow wealth, especially with the dollar being so shaky and the Euro plummeting in value. I also found a pretty good article elaborating on the ways to invest. here's the link if you're interested http://theinvestmentreporter.wordpress.com/

  • Report this Comment On June 04, 2010, at 3:59 PM, LAVol wrote:

    As a former BP employee (retired) and Gulf Coast resident, I have no love lost for the company, but I respect them. To reaffirm a comment above: "[BP] as a company...they have the right people and the right ethics - internally, where it counts. They work hard to achieve the right thing...not just a bunch of B.S. to make everyone think they mean well." BP makes it hard to work for them because they are so fanatical with regard to ethics (going overboard and overburdening employees with major overkill in this area). I don't think there is a company in the entire world that is more ethical than BP.

  • Report this Comment On June 04, 2010, at 4:01 PM, DonDagenais wrote:

    "They are, after all, responsible for the greatest ecological disaster that any of us will [hopefully] see."

    How quickly we dumb humans forget larger disasters such as Chernobyl, Mount St Helen's xmas Sunaami 2004 etc.

  • Report this Comment On June 04, 2010, at 4:17 PM, shortonnotes wrote:

    I never write in on these things & now I know why......if your life isn't about people, then all the money in the world won't help you. BP/Arco could have brought in super tankers & been sucking this oil up with another pipe like the Saudi’s but hasn't. There are 100 ways to plug the hole permanently but BP/Arco has chosen a path that would allow them access to the oil. They would sooner cut off their arm then plug that hole. They would sell their mothers, fathers, sisters, you, me, entire countries & entire worlds, than plug that hole. The entire eco system & lives of these folks never crosses their minds, it just can’t. They wouldn’t be well trained assassins’ if they thought any other way. Now they’re in the cross-hairs of other assassins & you want to make a bet on the winner? They should be running for their lives yet they choose to carry gold across a desert instead of water.

    If your only choices in life are bets on disasters then go with the folks who benefit from this. How will these folks get their seafood (from Pacific Ocean companies)? How will they survive the changes in lifestyle? I think you can start shorting the tourist industry in the south without too much trouble. There are so many ways to deal in here than placing your bet with the guy that wants “his” life back. I’m sorry BP/Arco, you forfeited your life when you insisted on continued drilling, on an unsafe rig. When you allowed oil to continually gush into the Gulf as oppose to bringing in 20 supertankers & sucking. When you traded their southern lives & way-of-life, for your bottom line.

    If you need a dance partner & think you can dance with BP/Arco without the smell getting on you, I’m here to remind you to go home now. BP smells of death & I'm tired of being sold out as a country. I’m from the north but, if the south would like to rise again, I’m with them all the way. The sadest statement is; this isn’t Ecuador or Chile………. this is the US.

  • Report this Comment On June 04, 2010, at 5:04 PM, loanwolfj wrote:

    People wake up!!! Those of you who think it is only a small light might realize that you are standing in a train tunnel. It is not even in the fan yet and you are making such ass lip comments that BP is a good buy. Do you actually believe that when this gusher is finally plugged all will be well??? We are approaching 50 days and the oil is still leaking and it is just now reaching land. Less than 1% of the oil spill is ashore and look at the damage it has caused.

    Over the next three months we will see the annual hurricanes that come every year and they will blow this oil inland and destroy entire ecosystems and coastal communities for years to come. Maybe in your simple little minds you think that a handful of toy shovels and sand buckets will make it all better. There is plenty of blame to go around from the previous GUARDIANS who set up all the safety and environmental precautions to the greedy corporate bigs who put profit as their mantra. In any event, in my humble imagination, money spent on BP at this time might as well be flushed down the drain.

  • Report this Comment On June 04, 2010, at 8:01 PM, fredamorris wrote:

    If BP is so ethical how did all those safety violations get ignored in the first place? I am hopping mad at the ecological and human distress this has caused, and I hope with all my heart that things get resolved in a hurry. I just can't believe BP would want this to go on any longer just to recover the oil in that well. It is just too small an asset in their big picture. With all that being said, I'm still an investor. I bought BP today.

  • Report this Comment On June 04, 2010, at 8:36 PM, ozzfan1317 wrote:

    Wow some of the comments on here you would think BP were secretly NAZIS or something..lol Its a horrible ACCIDENT they don't even have 100 % liability and its very likely thier damages could be capped. Not to mention four other companies partially responsible. This stock is so cheap right now if I had 10 G's I would drop it in a heartbeat. I don't understand why they are such whipping boys go picket Cameron they made the part that failed.

  • Report this Comment On June 04, 2010, at 8:36 PM, MMTInvestor wrote:

    Interesting perspective on how BP can resolve to do good by its shareholders while also acquiescing to (ridiculous) calls by politicians to suspend its cash dividend: http://seekingalpha.com/article/208109-why-bp-should-pay-its...

  • Report this Comment On June 04, 2010, at 8:38 PM, ozzfan1317 wrote:

    Also I bought another 1000 dollars worth yesterday I'll gladly collect 9% while every screams about bankruptcy till the spill stops.

  • Report this Comment On June 04, 2010, at 8:43 PM, topsecret10 wrote:

    Obama Warns BP on Paying Big Dividends Amid Oil Spill....... NEW ORLEANS — President Obama visited the Gulf Coast on Friday and chastised BP for paying billions of dollars in dividends to shareholders and on advertising to save its image while some people whose livelihoods were wrecked by the company’s oil spill were reporting difficulties in getting their claims paid.

    .“My understanding is that BP has contracted for $50 million worth of TV advertising to manage their image during the course of this disaster,” President Obama said after meeting with local and federal officials at the airport near here.

    “In addition, there are reports that BP will be paying $10.5 billion – that’s billion, with a B – in dividend payments this quarter,” he continued. “Now I don’t have a problem with BP fulfilling its legal obligations, but I want BP to be very clear they’ve got moral and legal obligations here in the Gulf for the damage that has been done. And what I don’t want to hear is, when they’re spending that kind of money on their shareholders, and spending that kind of money on TV advertising, that they’re nickel-and-diming fisherman or small businesses here in the Gulf who are having a hard time.”

    http://www.nytimes.com/2010/06/05/us/politics/05obama.html?s...

  • Report this Comment On June 04, 2010, at 8:46 PM, ozzfan1317 wrote:

    My comment disappeared but there not the only company responsible and it was an accident i'm upset about the injured wildlife but i'm still buying the stock.

  • Report this Comment On June 04, 2010, at 8:48 PM, moretoons wrote:

    These comments are interesting, and a bit disconcerting. Companies like BP and Goldman Sachs can only be punished in their corporate wallet. When disasters, either financial or environmental, occur due to negligence, they are not "accidents". The oil spill was not truly an accident. It was the result of negligence on the part of BP (based on information that is emerging from the workers that were on the platform when it exploded). Furthermore, BP has a horrendous safety record, according to the MMS (I can't imagine how one gets that kind of record with such a corrupt government agency). In addition, they obviously haven't spent the money to study how to fix problems at depth, though they obviously spent plenty in drilling at depth.

    While I realize the purpose of The Motley Fool is to help us all grab as many dollars as we can before we die, I can't stomach the idea of buying stock in a company that has done what BP has done. Sorry, I have a conscience and can't imagine what my beloved coasts will look like when this is done.

  • Report this Comment On June 04, 2010, at 10:00 PM, 2beewise wrote:

    I absolutely concur with June 04, 2010, at 8:48 PM, MORETOONS above. There is definitely a moral issue in supporting BP. I have no reservations about calling their record criminal. It was deliberate negligence, driven only by the $.

    There are many numbers afloat relating to the cost of clean-up. First-of-all, it can't even be done. (my field is wildlife biology) It will take the pelagic environment more than 100 years to recover, if then. It is technically to say "we don't know exactly what the extent of the damage will be" But that's like saying we don't know exactly what the extent of the damage will be when we spill red wine on a white silk dress. Can it still be worn? Well.....yes.

    The real cost of this spill will exceed a trillion dollars and maybe multiples there-of. The real key to cost is, what constitutes "cleaned up"? Is clean-up accomplished when we can't see evidence of the spill at more than 100 yd. distance, or when you are willing to swim in it? Is it cleaned up when we see birds overhead? When we no longer see oil on the water; in the sandy beaches; in the wetlands; or when the mangroves return? Not by a long shot. We don't know exactly what the total damage will be or how long it will take for some forms of life return, but we can definitely make educated estimates and with a high degree of accuracy, relating to the "end" result. None, even the youngest of us, will ever see full recovery of the Gulf marine ecosystem to it's normal state of health.

    The natural environment is our life-boat. It can not be recreated. It can only be destroyed or protected and preserved.

    There are too many other equally lucrative investment options open to us. We don't need BP and BP doesn't deserve us.

  • Report this Comment On June 05, 2010, at 1:46 AM, MeTwit wrote:

    I suspect BP will restructure ... I do not know much about corporate org, but I would suspect it is at a time like these when a company would transfer its valuable assets to a new shell leaving the old shell to take punches. I do not see BP surviving this ... at least not with much value to hold on.

  • Report this Comment On June 05, 2010, at 7:46 AM, troycarpenter wrote:

    Wise words by Puckplayr4 ´

    I work in the oil industry for the last 23years in the exploration and drilling side of the business. I currently work for an oil company as a company man on a rig. It is very well known within the oil industry that the likes of BP and Shell have the strictest safety rules in the business. BP being the professional company that it is took the bull by the horns and are still running with it. Thank God it was BP and not some of the smaller independents dealing with this disaster. (That would be your tax dollars paying).

    I worked 15 years for Halliburton including running deepwater completions, with Cameron BOPs and also at the 1500m depth. The people should understand and aim their anger more to the service company’s whose operations or equipment was at fault.

    The reason you pay a contractor is because they are supposedly experts at what they do, they supply technical knowhow and specialised equipment.

    BP is not at fault from where I see it. “They are LIABLE”. This could have been any company in the gulf. Many use Cameron BOPs and Halliburton to do their cementing. That is their respective core businesses.

    BP will survive and people will also say "Thank God it was a World leader capable of covering the cost"

    BP does not make the rules or legislation but I they follow it closer than most of its rivals.

    Enough defending BP. I am going to be buying some bargain stock. BP will bounce back along with its stock price.

  • Report this Comment On June 05, 2010, at 9:32 AM, FoolSolo wrote:

    Screw BP! They have a history of carelessness and a list of violations that is miles long. The real gem in the rough here is DRQ (Drill Quip). They provide the deepwater drilling equipment and wellheads that BP uses in the Gulf. They have taken a huge dip over this along with BP, but they are a much better bet. DRQ has no debt, lots of cash, strong management/owners, and they are expanding in Asia and Brazil. At the current mid-$40 range, down from $70, they are a good takeover target, and they will bounce back. DRQ also has the best profit and operating margins in the business.

    Why invest in a careless and risky bet like BP, which may possibly go bankrupt from this spill, when you can get a beaten down gem like DRQ at nearly half its worth. I know where my investment is going.

  • Report this Comment On June 05, 2010, at 2:22 PM, grungeday wrote:

    You cannot compare the exxon spill with the bp problem. Exxon faced a worst case senario of 5 billion dollars which at the time was equal to one years profit for company. The liabillity for bp hasn't been calculated yet but I saw one potentilal possibility of a 4300 per barrel fine is possible for each barrel spilled into the gulf. That's without clean-up cost's or other liability's. That being said I saw a article which put exxon mobil at the fifteen position of proven reserves. That put's 14 other companies which larger proven reserves than exxon. All fourteen other companies which have larger reserves are government controlled,. If the US govt destroys BP it will probably be bought by a foreign govt's controlled oil company. That will put more oil reserves into the control of foreign govt's. I think it's in the best interest of the US to keep BP whole so I am seriously considering buying BP.

  • Report this Comment On June 05, 2010, at 2:27 PM, starbucks4ever wrote:

    Yes, BP is a buy if your name is Dick Fuld. Let him buy it. For all others, BP is a bankruptcy candidate.

  • Report this Comment On June 05, 2010, at 2:43 PM, ragedmaximus wrote:

    there is no comparison for the xom vs bp spill because times have changed alot as in usa govt wrecking ball hand can crush bp for years to come so yeah bp might be a good buy in year 2015 but not this year so i wouldn't be so quick to pull this trigger.but the evil no good hedge funds will enter in bp witj truck loads of money and drive the price up till joe trader buys in and the the hedge funds will leave joe holing the bag

  • Report this Comment On June 06, 2010, at 12:13 AM, Ak66 wrote:

    Bp may be a good investment, but it is not a good company. I was recently fined for a significant safety issue at Texas City (remember, several people died due to willful and repeated neglegence) and has had significant environemntal issues at other facilities it owns and manges. They are no Exxon.

    Also, there is nothing but bad news ahead. The oil is only beginning to impact the costal communities. Why important? The tidelands, swamps, and costal waters are where the vast majority of the biomass lives and breeds. Kill it, and everything else dies. Millions of jobs in this area are based in fishing. Most of those people live hand-to-mouth. One bad season, and they will be missing payments on everything they own. The oil industry also hires many people and off-shore development has been idled. These people work by the day. No work, no pay.

    This event will crush the struggling Gulf economy and impact the national economy negatively. There will be millions of people looking for significant punishment for BP.

    This stock will be dropping for a while. I would not buy yet, if you can stomach the company.

  • Report this Comment On June 06, 2010, at 5:26 AM, nosocksjuststock wrote:

    Hippi or Yuppi ?

    The hippi's of the 60's and 70's would shun BP in a second.

    The yuppies would be buying in a second.

    I have strong conservative, ecological, conservation type convictions. So I don't like the spill in general and the length of time it is taking to stop the leak.

    They said it was leaking 5000 barrels a day at first. But later estimates put it at 100000 barels a day

    Seems like if they get it capped and producing they won't have much of a cash flow problem.

    I would concider it a buy at $25.00. Which means it probably won't go below $27.50.

  • Report this Comment On June 06, 2010, at 11:30 AM, bronzeguy wrote:

    RE:the comment below:

    "Morally reprehensible" in this case isn't even remotely analogous to the supposed morally objectionable character of investing in tobacco companies.

    My comment:

    "supposed" ? Altho there are many problems associated with the actions of the companies we invest in, are you sure that selling an addictive, known and proven carcinogen to your kids can be classified as supposedly objectionable? I almost dropped MDP over that one.

  • Report this Comment On June 06, 2010, at 2:04 PM, tpearse wrote:

    I don't care to profit off of any company that I believe is detrimental to our economy. That is exactly what I hate about Wall Street. Profits over corporate responsibility at any cost. Please read The "Tyranny of Oil" by Antonia Juhasz..... or google Antonia Juhasz Video. Then google the Atlantis "The Next Deepwater Horizon" and you will learn that the BP Atlantis lacks more than 6,000 documents that are key to operating the rig safely. It is reported that the vast majority of the project's subsea piping and instrument diagrams were not approved by engineers, and the safety systems are out of date... components necessary for ensuring the rig's secure operation. The next catstrophe is closer than we think.

  • Report this Comment On June 06, 2010, at 3:10 PM, wornoutshoes wrote:

    Profit or not, I cannot in any good conscience lend money to any company involved in such a disaster in our continually weakening ecological system. There are simply too many better ways to invest your money that will give similar returns as this company. Our children will surely pay for this, along with the myriad of past and present sins against our Mother Earth.

  • Report this Comment On June 06, 2010, at 10:38 PM, zekelunder wrote:

    Who wants to own a piece of a company that has poisoned the richest delta in our hemisphere, ruined thousands of working people, and utterly failed to develop contingency plans for their deepwater operations?

    I agree with the comments above. Take ownership of your investments! If you own BP stock, you ARE BP, and you might as well be pouring crude into your local creek or estuary.

    Boycott BP, boycott dirty energy, invest in something that you can feel good about.

  • Report this Comment On June 07, 2010, at 1:24 AM, Franksfoil wrote:

    Hey, I live in Florida. Here's some news--I drive around and see that their is no one buying gas at the BP stations. That's right. They are the most hated company in the US right now and rightfully so. Good buy? If your former customers hate you then probably not. However, we in the gulf coast states have plenty of dead wildlife we can offer as an incentive for every share of BP stock purchased for those who have the filthiness of a cockroach to give these people more money! Buy their stock now and burn in hell later.

  • Report this Comment On June 07, 2010, at 5:07 AM, MyDonkey wrote:

    If an "accident" is "an unforeseen event that is not the result of negligence or misconduct", then the gusher of oil in the Gulf is definitely not an accident. A NYTimes article gives several examples of negligence and misconduct in the days & weeks leading up to Deepwater Horizon blowout:

    http://www.nytimes.com/2010/06/06/us/06rig.html

    BP could have prevented this catastrophe if they had followed standard safety procedures, and not cut corners in attempting to save money, and responded appropriately to the warning signals they saw but chose to ignore.

    Is BP a buy? No. I won't buy a company responsible for destroying the environment and people's lives due to negligence and misconduct.

  • Report this Comment On June 07, 2010, at 5:58 AM, troycarpenter wrote:

    Some comments in this column make me laugh and some make me wish I could meet the authors face to face.

    Some seem like "Let’s boycott BP and kill them off". Others say "Burn in Hell". These are very narrow minded short sighted views.

    Firstly BP is a Global company and even if they had the leave the USA they will still do quite nicely.

    As I said in previous comment this could have happened to any company in the gulf. It just so happened to be BP.

    Others state the list of failings by BP. If the laws need strengthening, take that up with the politicians.

    Looks like BP is just a “blame name” in this fiasco. Look deeper and find the real problems. You will find it’s not a company that needs to change; it’s much more than that.

    After the Piper Alpha oil disaster off of Scotland 20 years ago, many new policies and practices were implemented to prevent reoccurrence. Still today we work by the changes implemented. Deep water drilling has been around for less than 10 years and even today new records are being set as the this technology is still in its infancy.

    This disaster will be and should be used as a "Lessons learned" and "What can we do better"

    When the shuttle Atlantis blew up, man continued to go to space. When the Titanic sank men built bigger ships. When the Piper Alpha blew up, we drilled deeper for oil on bigger rigs, and unless you want to import 20 million barrels of oil per day “Which too could have its own disasters” we should follow history and learn then move on.

    I have seen the jobs job BP create around the world, I have seen the schools they have built, the hospitals, the universities they sponsor. This is a localised problem “Yes with massive cost to the company" but this is a major oil company. It is a global company. Again "Thank God they have the means to compensate those affected and it was not some of the smaller players". Equally I have seen the remains of the Piper Alpha, I have seen accidents on rigs, environmental issues happen. Look at mining, nuclear, aviation and shipping industries, they all have their own stories.

  • Report this Comment On June 07, 2010, at 10:08 AM, whatzaname wrote:

    Anyone who would buy a stock without regard to the unethical and unconscionable behavior of the corporation is no better than the greedy b@stards that bilk the people and their pension plans, or skip obvious safety rules, willing to exchange workers' lives and the health of the oceans for quick short term gain. Whatever harm comes to the businesses and families of the Gulf, or to the families devastated by the greed of the financial industry, that harm can be directly linked to the greed of investors, wiling to put their money and their moral character behind such pathologically evil behaviors.

  • Report this Comment On June 07, 2010, at 10:47 AM, Franksfoil wrote:

    "Some seem like "Let’s boycott BP and kill them off". Others say "Burn in Hell". These are very narrow minded short sighted views.

    Firstly BP is a Global company and even if they had the leave the USA they will still do quite nicely."

    Speaking as a member of a gulf coast state BP is invited to do so. It's about time our government stopped sucking at the teat of the oil industry and allowing them to basically write our energy policy. Our government needs to be able to regain their independence to deal with this crisis themselves and not rely on a company that has proven itself a liar.

    It is particularly infuriating to those of us that believed BP's former PR campaign about how much BP cared about the environment and then are horrified to find after the fact that BP was a major lobbyist against doing environmental studies, putting in safety devices, tolerated shoddy construction and failed safety tests and amply proved that they didn't have any solid contingency planning for disasters like this one.

    Then, when it happened BP lied about the volume of oil spewing into the Gulf. When the EPA demanded that BP use a less toxic dispersant BP ignored a federal government order and refused to do so. Some law-abiding environmentally-senstive company you are.

    BP said that they will pay damages and yet you turn on CNN to see that local Louisiana fisherman state they are getting "nickeled and dimed". About 1,000 area residents recently attended hazmat training to clean up the spill here in Florida and yet it is being reported that only a small percentage have so far been hired by BP. And why does BP say that there are only a piddly reported 1,700 vessels (not much when you consider how expansive the affected coastline is)? it's because nobody is trained yet. Liars.

    And they admitted they are liable for the incident that outright killed 11 people.

    Their best effort after causing an ecological disaster on the level of dropping the bomb on Hiroshima is a 50 million dollar PR 101-type campaign that simply says "Ooops!"

    No. No mistake. BP and the oil industry lobbied against being made to be safe. As other posters have stated they have at least one other Transocean rig still in operation that has more safety violations that the one that blew.

    Why in the world would anyone want to invest in a company that has demonstrated such incompetence, misinformation, admitted negligence and outright malice and stands to be made to pay out billions of dollars in damages is beyond me.

    A better investment is to be found in electric cars (Toyota and Chevy), solar systems and wind energy. We are saving our pennies for the forthcoming electric cars--Tesla, Leaf and the Volt. We can't wait to be done with the gas industry for good. (Don't say you need petroleum to make plastics because they already do so out of cornstarch, etc) Hopefully, the oil industry won't be allowed to turn our backyard into a toxic stew before that happens.

  • Report this Comment On June 07, 2010, at 10:55 AM, Franksfoil wrote:

    "Some seem like "Let’s boycott BP and kill them off". Others say "Burn in Hell". These are very narrow minded short sighted views.

    Firstly BP is a Global company and even if they had the leave the USA they will still do quite nicely."

    Speaking as a member of a gulf coast state BP is invited to do so. It's about time our government stopped sucking at the teat of the oil industry and allowing them to basically write our energy policy. Our government needs to be able to regain their independence to deal with this crisis themselves and not rely on a company that has proven itself a liar.

    It is particularly infuriating to those of us that believed BP's former PR campaign about how much BP cared about the environment and then are horrified to find after the fact that BP was a major lobbyist against doing environmental studies, putting in safety devices, tolerated shoddy construction and failed safety tests and amply proved that they didn't have any solid contingency planning for disasters like this one.

    Then, when it happened BP lied about the volume of oil spewing into the Gulf. When the EPA demanded that BP use a less toxic dispersant BP ignored a federal government order and refused to do so. Some law-abiding environmentally-senstive company you are.

    BP said that they will pay damages and yet you turn on CNN to see that local Louisiana fisherman state they are getting "nickeled and dimed". About 1,000 area residents recently attended hazmat training to clean up the spill here in Florida and yet it is being reported that only a small percentage have so far been hired by BP. And why does BP say that there are only a piddly reported 1,700 vessels (not much when you consider how expansive the affected coastline is)? it's because nobody is trained yet. Liars.

    And they admitted they are liable for the incident that outright killed 11 people.

    Their best effort after causing an ecological disaster on the level of dropping the bomb on Hiroshima is a 50 million dollar PR 101-type campaign that simply says "Ooops!"

    No. No mistake. BP and the oil industry lobbied against being made to be safe. As other posters have stated they have at least one other Transocean rig still in operation that has more safety violations that the one that blew.

    Why in the world would anyone want to invest in a company that has demonstrated such incompetence, misinformation, admitted negligence and outright malice and stands to be made to pay out billions of dollars in damages is beyond me.

    A better investment is to be found in electric cars (Toyota and Chevy), solar systems and wind energy. We are saving our pennies for the forthcoming electric cars--Tesla, Leaf and the Volt. We can't wait to be done with the gas industry for good. (Don't say you need petroleum to make plastics because they already do so out of cornstarch, etc) Hopefully, the oil industry won't be allowed to turn our backyard into a toxic stew before that happens.

  • Report this Comment On June 07, 2010, at 6:12 PM, keddie1 wrote:

    Howdy Wahoo Jim, Nice to meet you.

    I am not above learning and you seem to be in a teaching mood. Hope you are willing to answer a few questions.

    Because of your post I reviewed my position on the specific point you raise and so went off to do a bit more research. I found some good straightforward articles. The URLs are below…

    The articles support your statement. In fact the articles paint an even better picture in that the crews on board the Development Driller III, working on the first relief well, and Development Driller II, working on the second relief well - WILL likely hit their target mark on the blown out well – on the first try.

    That being said, the articles point out that August is not a done deal. Getting to the blown out well is hard, dangerous work in itself. Gaining control of the blown out well once they gain access to it is a whole other matter. The articles talk a bit about that.

    Most of my comments on the Montera and the 1979 Mexico blow outs I believe are still on with the except of the actual number of Relief Well’s drilled (again Wahoo Jim’s point)… From the available literature on Montera it is not clear how many relief wells were drilled. It may have been only one. What the literature says is that there were five attempts with each taking considerable time. It also says that at one point the rig drilling the relief well caught fire. On the 1979 Mexico blow out the literature says that two relief wells were drilled. But then it took many attempts and many months to gain control of the well.

    If we reduce my statement to … “August is not a sure thing” … then that should cover your concern Wahoo Jim. Yes?

    A few more questions for you Wahoo Jim. What is your professional opinion on August not being a sure thing? Accepting that technology has advanced a lot since 1979, is there a non-zero probability (something like 5% or more) that it may take multiple months to gain control of the well. (I’m not saying it will, and I sure hope it does not… this really about understanding potential risk).

    Getting back to my point, BP needs to regain control of the well in order to get started on its end game. It is only then that there is a really good picture of the total devastation, liability, etc.

    James Keddie (my real name).

    http://www.nola.com/news/gulf-oil-spill/index.ssf/2010/05/ch...

    http://www.nytimes.com/2010/06/04/science/earth/04relief.htm...

    http://www.subseaiq.com/data/Project.aspx?project_id=562&...

  • Report this Comment On June 07, 2010, at 7:51 PM, philkek wrote:

    M.F. shows here in these writings of many smart fools - smarter than me - that FEAR and GREED are alive and well in our lives. After reading all these comments my question to myself is should I go with FEAR and not buy BP ? Should I go with GREED and buy BP ? I will take M.F. advice and do more homework. What FOOLS we mortals be. Fool on.

  • Report this Comment On June 07, 2010, at 10:35 PM, ObscuredVision wrote:

    I held on for a little while but got rid of my stock as soon as it became apparent that BP was managing the truth. The only way to change management philosophy is to punish them by hurting their bonus payments and one of the best ways to do that is to dump their stock. It's may be a naive approach but it's a principled approach.

  • Report this Comment On June 08, 2010, at 5:58 AM, Gorch wrote:

    From my current point of view the risk is not the overall compensation BP eventually will have to pay for the damage. The risk lays in the event when it will eventually happen to stop the oil-leak. Until now BP failed with any efforts it has taken to stop the oil-leak. There is no serious solution at hand at the moment that draws a beautiful picture on the horizon. As long as the oil spils the stock may continue to drop. On the other hand I believe and agree with Matt that BP as a company has strength to face situations like this. As soon as there appears light at the horizon the company is a strong buy to me.

  • Report this Comment On June 08, 2010, at 10:50 AM, Superdrol wrote:

    Money is about to meet mouth again. BP is on sale today.

  • Report this Comment On June 08, 2010, at 11:22 AM, jszamm wrote:

    Thanks for all of the intriguing commentary on BP. I struggle with the idea of buying a "good value" when I am morally opposed to supporting companies that may be irresponsible, etc. For me, it's like buying MO for their incredible dividends and value even though their product, when used properly, kills people.

    I realize, too, that the best investing removes all emotional attachments or judgments, hence the struggle. Truly, I'm not sure what I will do, but BP does look like a good opportunity for now.

    Finally, it's really sad to see how some people will do anything to drum up their fear-based political opinions into any conversation. I guess it's the sad truth of our time that we can spout off like idiots as long as we are behind a keyboard. How brave is that?

    I'm sad to think about how many of us are truly ignorant about our Constitution and Bill of Rights and how those who created them truly sacrificed for future generations. Now many of us just sit around and whine about things we don't truly know just because someone else told us to be angry. Regardless of your political beliefs, I believe the people (e.g., Maddow, Limbaugh, O'Reilly, Olberman, Hannity, etc.) feeding us this info are merely entertainers, yet their material is neither funny nor entertaining to me, and most of us see it as fact. It's merely OPINION! It's time to WAKE UP people! Do your homework before spouting off, please.

  • Report this Comment On June 08, 2010, at 11:41 AM, geojak wrote:

    well here's my bit of drivel to add to the stream of consciousness. oh I do think the cap is gleam of hope too.

    BUT I figure bp's book value was about 31-32 dollars per share. we're quickly approaching that the income is high and the GoM decline rate is low so there shouldn't be much call for development well additions to maintain the production levels on stream. Russia's calm and can't afford to kick anyone out right now. Tangguh is up and running and it's shallow water gas, Angola is...

    So a company is basically current book value plus forward earnings potential, minus debt and liability. this is handleable debt. So how much is liability worth? the number seems to be 30billion according to the bloggers. Though most don' know much lets run with it anyhow. If market cap was around 150billion and its about 45% discounted could this mean that the now ~83b dollar company (twice market cap of hess) should be closer to 150-30 = 120>83 (billion) by 37 billion, which is roughly 50% more value than at present. So I figure the stock should be around 52 dollars.

    Is this horribly off base if you can follow?

    I probably should have been buying 34 dollar bp stock instead of writing as it's now up a dollar.

    One parting shot is that as much as this debacle sucks, we should bp thankful it was big oil and not little oil that stumbled on this ants nest. If it'd been Cobalt instead of BP, do you think the Carlile group would be paying all this money out. I think they'd detach themselves from the liability and leave Cobalt with no resources to worry about it. I don't know why America hates big oil so much. Is it because they have to pay them to drive their suv's???

  • Report this Comment On June 08, 2010, at 2:15 PM, slidexperto wrote:

    BP will still hit $25.00 level which includes investors dumping the shares together with the political-environmental problem that goes with it. Believe me....

  • Report this Comment On June 08, 2010, at 2:20 PM, slidexperto wrote:

    Don't forget to buy CASCADES, a Canadian stock that makes rolls, toilet papers, etc. will hit the CAN$ 8.00 summer July 2010. I just bought 10,000 shares of CAS last week @ $6.60 and waiting for the $8.00 level this July. This is my 1 Canadian stock that I bought and I usually play American stocks ever since. I am Canadian citizen now. They have a paper product "intelligent paper" bacteria-free submitted to US F&DA for approval and they are the first to do so....buy more!

  • Report this Comment On June 09, 2010, at 10:07 AM, Superdrol wrote:

    Money and mouth are on a first name basis at this point.

  • Report this Comment On June 09, 2010, at 6:33 PM, mj2boogie wrote:

    I am amazed at some of the comments above, and how many people mix political and social ideology with investing analysis. Boycotting BP will have little effect for a couple of reasons: I believe that every BP station in the USA is owned as a franchise, so the hurt is on the franchise owner (small businesses), and supply and demand with generally eliminate the impact on BP as they will still sell their products to someone in the marketplace.

    Additionally, comments like "...offer as an incentive for every share of BP stock purchased for those who have the filthiness of a cockroach to give these people more money! Buy their stock now and burn in hell later." probably have no place in a column like this with is suppose to be about investing. I can ingnore it because it just sounds dumb, and I don't believe in hell. But it probably still doesn't belong here.

    Many also seem very unfamiliar with how corporations respond to these types of events and don't recognize that most companies would probably behave similarly. It is also clear that many are unfamiliar with how deep-water drilling is done and the technologies used. As a geologist involved in deep-water drilling for over two decades in the Gulf, Nigeria, and Angola with another major international oil company, I can tell you that things are not as simple as some have supposed. BP may or may not have, in this particular case, behaved irresponsibly - that may be determined in the future. Other companies may share some responsibility and liability (APC, RIG, HAL, CAM, etc.), but that also will be determined in the future. However, BP still looks good to me as an investment. I don't believe that the stock losses of these companies can be explained by future cleanup costs, litigation, etc. Even the heavy hand of President Obama will likely not have that big of an impact, though I don't rule out entirely the ability of the government to ruin good businesses through foolish intrusion on their business - that is part of the risk that I try to evaluate.

    I don't like what is happening in the Gulf, I wish they could shut off the flow from this well today. I wish it had all never happened. I wish the 11 guys who died could "have my life back", so to speak, in the words of Tony Hayward, BP's chief executive.

    All that said, I bought BP on 6/1 (see my comment: June 04, 2010, at 2:47 PM, mj2boogie), and I think I will buy some more tomorrow at around $29. It may go down more, but over the next couple of years or so I think it will be a good investment for me.

    Mark

  • Report this Comment On June 09, 2010, at 11:45 PM, foolisholdgirl wrote:

    One need only to put this spill in historical perspective to see that BP is a good buy at the current price. There was a spill in 1979 in the Bay of Campeche that exceeded 140 million barrels of oil. Don't remember that? www.associatedcontent.com/article/454782}/the_worst_major_oil_spills_in_history_pg3.html?cat=37 I didn't either. The Gulf recovered and I doubt the clean up effort was as intense as this current one will be.

    The point is that this price drop is mostly an emotional and consequently artificial one and I don't think it will last much longer than the next big thing the popular media focuses on. They have already quit covering Hati.

    Those who think they are going to hurt BP in the long run by a boycott of its gasoline or stock do not understand the global nature of the oil market nor will they quit driving to the grocery store. They have however,created a window of opportunity for fools like me to purchase some stock I would have otherwise considered too expensive. So, I will buy some while Obama decides whose "arse" to kick.

  • Report this Comment On June 10, 2010, at 12:27 AM, foolisholdgirl wrote:

    I'm adding a "P.S."

    Before some of you lump me in to that greedy, conscienceless, earth-destroying,money grabbing profit taking bunch that will cause the death of us all you might consider that I need the money for the huge increase in health care costs that I will face when that health care reform kicks in. Whose "arse" can I kick for that????? Or for the current state of Social Insecurity? I wish I had that money (which I consider stolen) to invest .................

  • Report this Comment On June 11, 2010, at 2:18 AM, PeterBradshaw wrote:

    It seems clear that the MMS regulation agency was weakened during the Bush (oil) / Cheney (Halliburton) presidency. Most of the permits for the failed well were issued during that time. Too bad the Obama presidency has been slow to correct this (although the Republican Filibuster Senate would have made it hard). Maybe some good will belatedly come from this spill.

    The amount of oil poring into the gulf from the well keeps getting reassessed upwards, from 1000 gallons/day, to 5000, to between 12,000 and 25,000, and now somewhere around 30,000. The fines for this grow also, and the present cap is not able to capture more than a fraction

    The damage at the surface has now reached four states (not counting something that may have got to Texas). Tens of thousands of fishermen have been put out of business, possibly for years. The compensation should be many 10s of thousands of dollars each. Other tourist-related operations will also be losing comparable amounts. This will easily get into the billions of dollars.

    There appears to be a substantial amount of oil, perhaps mixed with dispersants, at substantial depths in the gulf. BP's early denials that this could be so have now been overcome by additional studies. This could well cause problems with the phyto-plankton that form the base food for the seafood chain.

    Not to mention the serious current threat to brown pelicans (just off the endangered species list; perhaps soon to be back there), and the probable threat to the Ridleys turtle, which though well-distributed much of the time, breed only in the gulf. What penalty is reasonable if the spill causes that species to be lost, not just to us, but for future generations also.

    And the CEO's asinine and utterly insensitive remarks about wanting "his life back", even with an apology, hardly seems like someone whose company I would want to invest in! When his company has taken the life from 10s of thousands of innocent victims.

  • Report this Comment On June 11, 2010, at 2:20 AM, bornbully wrote:

    I couldn't live with myself if I bought BP. Not to mention the bad karma I would attract by benefitiing from the suffering of others. That would wreak havoc on the rest of my portfolio.

  • Report this Comment On June 11, 2010, at 3:18 AM, mrshastri wrote:

    What do you guys /gals think of Total or Shell? They have also been beaten up.

  • Report this Comment On June 14, 2010, at 12:39 AM, mighty88 wrote:

    Isn't it Moody give all the good rating during

    the pre recession day, Moody have never warn

    us of the impending danger. There are so many

    government data and institution they have overlooked and they just keep their mouth shut

    because of their greed. Now so many retiree

    have lose their hard earned money because

    they have keep their mouth shut. Now

    would you believe Moody if they give

    a good A rating to BP, since BP is one

    of their important client.

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