Now That BP's "Top Kill" Failed, "Stock Kill" Resumes
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As hope now fades that BP (NYSE: BP) has an immediate solution to stop the gushing Gulf oil leak, following the failure of last week's "Top Kill" maneuver, investors hope is also fading.
Shares of BP are down 29 percent since the leak started on April 20. Last week saw the most positive movement in the stock since the disaster started on hope that the risky "Top Kill" bet would stop the leak. While still closing negative last week, the stock was only down 2 percent and had two up days. But now that "Top Kill" has failed, "Stock Kill" has resumed.
Shares of BP are down 15% in overseas trading and pre-open NYSE trading Monday.
BP is now attempting another risky maneuver that threatens to make the leak worse in the near term. BP wants to cut off the bent pipe at the top of the blow-out preventer, then place a new smaller dome-like device over the fresh-cut leaking pipe. The dome would allow the leaking oil to be siphoned to the surface into an oil tanker.
A past effort to use a much-larger dome to siphon the leaking oil failed earlier this month. Water flowed inside the dome and when combined with leaking natural gas hydrates formed that clogged any oil flow.
The new dome will be smaller, which will allow for a snugger fit with less water. Engineers will also use hot water on the outside of the pipe to prevent hydrates from forming.
If this plan doesn't work, BP may try to place a second blowout preventer on top of the existing one.
Still the best chance BP has for stemming the gushing oil is the drilling of two relief wells, but the wells won't finished until August.
With somewhere between 20-40 million gallons of oil already having leaked from the well and with no end it sight to the worst oil spill in history, investors have looked past BP's cheap valuation and shining 8% dividend and have run for the hills. Will the bleeding ever stop?
Shares of BP are down 29 percent since the leak started on April 20. Last week saw the most positive movement in the stock since the disaster started on hope that the risky "Top Kill" bet would stop the leak. While still closing negative last week, the stock was only down 2 percent and had two up days. But now that "Top Kill" has failed, "Stock Kill" has resumed.
Shares of BP are down 15% in overseas trading and pre-open NYSE trading Monday.
BP is now attempting another risky maneuver that threatens to make the leak worse in the near term. BP wants to cut off the bent pipe at the top of the blow-out preventer, then place a new smaller dome-like device over the fresh-cut leaking pipe. The dome would allow the leaking oil to be siphoned to the surface into an oil tanker.
A past effort to use a much-larger dome to siphon the leaking oil failed earlier this month. Water flowed inside the dome and when combined with leaking natural gas hydrates formed that clogged any oil flow.
The new dome will be smaller, which will allow for a snugger fit with less water. Engineers will also use hot water on the outside of the pipe to prevent hydrates from forming.
If this plan doesn't work, BP may try to place a second blowout preventer on top of the existing one.
Still the best chance BP has for stemming the gushing oil is the drilling of two relief wells, but the wells won't finished until August.
With somewhere between 20-40 million gallons of oil already having leaked from the well and with no end it sight to the worst oil spill in history, investors have looked past BP's cheap valuation and shining 8% dividend and have run for the hills. Will the bleeding ever stop?
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