Cheap BP No Longer Stands for "Big Problems"http://www.fool.com/investing/general/2011/11/12/cheap-bp-no-longer-stands-for-big-problems.aspx David Lee Smith
November 12, 2011
Following a year and a half to which "agonizing" is among the many adjectives that might have been applied, it just might be that British oil giant BP (NYSE: BP ) has turned a corner and is headed for better times. That, at least, would be the indication from the company's run of recent luck, which, including a big new discovery in the Gulf of Mexico, has generally occurred under the radar.
Even if you've never placed a single energy company's share in your portfolio, you know all about the company's tragic April 2010 explosion aboard Transocean's (NYSE: RIG ) Deepwater Horizon rig as it was completing the drilling of the Macondo well in the Gulf of Mexico. The result included 11 deaths, the burning and sinking of the big rig, and the worst oil spill in U.S. history. Further, deepwater drilling in the Gulf was halted until March of this year; BP's then CEO Tony Hayward was replaced by its current leader, Bob Dudley; and the company essentially became a pariah in the oil industry and beyond.
At least since the Macondo gusher was finally capped in mid-July, the lion's share of concern at BP has involved raising and setting aside funding to compensate victims of the spill. Early on, essentially at the behest of the U.S. federal government, a $20 billion trust fund was established as a foundation for compensatory payments. Through the middle of last month, about $7 billion had been dispensed to victims of the spill, both businesses and individuals.
BP the merchandiser
However, the $26 billion total included slightly more than $7 billion for BP's 60% interest in Argentina's Pan American Energy, the remainder of which is owned by Bridas, itself a joint venture between Bridas Energy Ltd., a privately held Argentine company, and CNOOC (NYSE: CEO ) China's largest offshore operator. However, for reasons that remain somewhat murky, that deal went caput last weekend, meaning that it'll now be necessary for BP to intensify its efforts to jettison a portion of its properties.
The company rakes in positives