BP May Have To Sell Assets To Subsidize Oil Spill Costs
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Due to the rising cost of the oil spill cleanup in the Gulf of Mexico, BP PLC (NYSE: BP) may have to sell some of its most valuable assets to help with the expense, legal costs and damages related to the disaster.
The oil company may have to look into finding suitors for its 26 percent stake in Prudhoe Bay on Alaska's North Slope and possibly other assets that may be seen as attractive.
According to Bloomberg citing CEO at Petroleum & Resources Corp. Douglas Ober., potential suitors could include China National Petroleum Corp., Occidental Petroleum Corp. (NYSE: OXY), and Hess Corp. (NYSE: HES).
"BP is going to have to look to other assets to pay for this mess they’re creating," said Ober. "They won't be able to use any of that cash flow to expand production or add to reserves, and that’s really going to put them in a bind."
Since the April 20 explosion that sank the rig that triggered the massive oil spill and killing 11 workers, BP has lost over 30% percent of its market value. The company has spent more than a billion dollars attempting to stop the leak that has released million of gallons of oil in to the waterway.
According to the Bloomberg report, asset sales are the likely scenario rather than a takeover due to the unknown total cost that the disaster will place on the company.
The largest oil and natural-gas producer in the U.S. region of the Gulf of Mexico is facing criminal and regulatory probes related to the circumstances surrounding the situation.
The latest attempt to stop the spill hit a snag on Wednesday when a blade connected to an underwater robot faltered when trying to cut out a pipe from the exposed well. The company is attempting to install a device that would allow it to divert the oil to the surface.
In addition, the company’s long-term issuer default rating was cut at Fitch Ratings on Thursday to AA from AA+, due to what the agency calls "concern that BP is still facing substantial additional risks in relation to the oil spill."
Shares of BP are up 35 cents to $38.01 in early market movement on Thursday.
The oil company may have to look into finding suitors for its 26 percent stake in Prudhoe Bay on Alaska's North Slope and possibly other assets that may be seen as attractive.
According to Bloomberg citing CEO at Petroleum & Resources Corp. Douglas Ober., potential suitors could include China National Petroleum Corp., Occidental Petroleum Corp. (NYSE: OXY), and Hess Corp. (NYSE: HES).
"BP is going to have to look to other assets to pay for this mess they’re creating," said Ober. "They won't be able to use any of that cash flow to expand production or add to reserves, and that’s really going to put them in a bind."
Since the April 20 explosion that sank the rig that triggered the massive oil spill and killing 11 workers, BP has lost over 30% percent of its market value. The company has spent more than a billion dollars attempting to stop the leak that has released million of gallons of oil in to the waterway.
According to the Bloomberg report, asset sales are the likely scenario rather than a takeover due to the unknown total cost that the disaster will place on the company.
The largest oil and natural-gas producer in the U.S. region of the Gulf of Mexico is facing criminal and regulatory probes related to the circumstances surrounding the situation.
The latest attempt to stop the spill hit a snag on Wednesday when a blade connected to an underwater robot faltered when trying to cut out a pipe from the exposed well. The company is attempting to install a device that would allow it to divert the oil to the surface.
In addition, the company’s long-term issuer default rating was cut at Fitch Ratings on Thursday to AA from AA+, due to what the agency calls "concern that BP is still facing substantial additional risks in relation to the oil spill."
Shares of BP are up 35 cents to $38.01 in early market movement on Thursday.
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