BP's (BP) Liability Could Already Be $80 Billion

Government scientists said BP's (NYSE: BP) leaking well may have been gushing as much as 40,000 barrels of oil a day, which is double prior estimates.

If 40,000 barrels per day has been leaking from the well, then there could be nearly 2 million barrels of oil in the Gulf of Mexico. This would put BP's estimated liability at $80 billion, based on an estimated from Goldman Sachs analysts that it will cost $40,000 per barrel for clean-up, litigation and other costs related to the spill.

Since a containment cap was placed on the gusher, BP said it has collected nearly 100,000 barrels and is currently collecting at a rate of about 15,000 barrels per day. This would put the amount continuing to spill into the Gulf at about 25,000 barrels per day.

BP's best chance to stop the leaking well is the drilling of two relief wells, which won't likely be complete until August.

Speculation is now centered on if BP will temporarily halt its dividend payment so the cash flows from the dividend can be used for the clean-up and a reserve fund for the expected liabilities.

BP had assets of $241 billion and liabilities of $136 billion, or net assets of $105 billion. The company has cash flow before capex and dividends of between $25-$40 billion per year.

After rising 13 percent yesterday, bouncing after tapping a 14-year low, shares of BP are up another 4 percent today to $34.40.

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