Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Santa Rally to S&P 4600+ - 28th Nov 23
Stocks and Silver Have Something to Say about Gold - 28th Nov 23
Can A Stock Market Crash Be Averted... For Now? - 28th Nov 23
Taiwan 2024 Election: Militarization or Development - 28th Nov 23
The Stock Market Trend and the Policy Behind it - 28th Nov 23
Cameco Uranium Stock Hits All-Time High - 28th Nov 23
TSLA, LRCX, TSMC Stock Earnings and Trend Analysis - 26th Nov 23
A Golden Setup: Gold Price Trend Forecast Report - 26th Nov 23
Gold Stocks Winter Seasonal Rally - 26th Nov 23
Elections in South America and Europe Reveal Backlash against Socialism - 26th Nov 23
LMT, JNJ and ASML Stock Earnings and Trend Analysis - 23rd Nov 23
When AI Hallucinates - Top AI Tech Stocks - 23rd Nov 23
Stock Market Ignoring Hawkish Fed - 23rd Nov 23
Stock Market Trend Trajectory into Year End 2023 - 22nd Nov 23
Copper/Gold Ratio: Still Counter-Cyclical - 22nd Nov 23
Learn to Use the FORCE! - How to Really Get Rich - 21st Nov 23
Quad Witching Cracks Stock Market Nuts - 18th Nov 23
Biden Bizarrely Brags About Lower Budget Deficits as US Federal Debt Skyrockets - 18th Nov 23
Silver Price Between a Rock and a Hard Place - 18th Nov 23
The Most Important Chat GPT Tech Reveal of 2023 - 18th Nov 23
AI Tech Stocks Portfolio - 9th Nov 23
Micron MU Stock Trend Analysis - 9th Nov 23
TSMC Stock Trend Analysis - 9th Nov 23
NVIDIA Stock Trend Analysis - 9th Nov 23
The “new ChatGPT” just launched - 9th Nov 23

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Vultures Circling Over Gulf Oil Disaster Hit BP Ahead of Relief Wells News

Companies / Oil Companies Jul 14, 2010 - 03:30 AM GMT

By: Nadeem_Walayat

Companies

Exxon, Petro China and other vultures are circling over the crippled oil giant BP now that it is within reach of 'hopefully' plugging the Gulf oil gusher though still facing perhaps as much as $100 billion in litigation.


Exxon has asked the Obama administration if they can have a shot at taking over BP, which highlights how the situation has become highly politicised as the place to ask whether to take over BP should be at the London Stock Exchange i.e. the stock holders.

BP has yet to confirm if its latest cap has been successful, they probably fear that the pressure is too great so don't won't to risk making the situation worse by causing the well casing to disintegrate, at best they are hoping the latest cap will reduce the rate of flow leak as an interim solution ahead of the relief wells which are just days away.

BP Debt is starting to recover but still trading at distressed levels due to the open ended litigation for compensation claims that range anywhere between $30 to $100 billion.

The BP stock price has started to pull itself off of the floor, whilst it may revisit the floor several more times in response to U.S. political and legal sanctions, the long-term trend barring takeovers and breakups remains hugely positive.

Potential Dangers remain - The Armageddon Scenario of What If Relief Wells Fail to Stop the Blowout ?

Well that would be terminal for BP as the gusher would keep blowing until enough of the oil and gas has escaped resulting in an decrease in the pressure to enable the well to be capped. How long ? 1 year ? 2 years ? 3years? its anyone's guess. But one things for sure it would be terminal for BP as BP would be bankrupt as liability costs would soar to far beyond $100 billion whilst BP would be forced to keep drilling new relief wells in an attempt at eventually plugging the hole, which even if it were to succeed say 6 months from now, it would be far too late to save BP.

My view - On the basis that the relief wells will succeed, the gulf oil gulf disaster can be seen as a short term crisis, long-term BP remains a huge gash generator even if it has to pay up as much as a $100 billion in costs, it would still represent good long-term value as oil prices trend ever higher towards and past $200 a barrel, so no wonder the vultures are circling to bid for large chunks of the company, though don't expect formal action this side of the relief wells.

Bottom Line - The Deepwater drilling gulf oil crisis shows that Oil price in the long-run is only headed in one direction, UP. Investors should continue to align portfolios to benefit from this inflationary mega-trend see Ebook (FREE DOWNLOAD).

Comments and Source: http://www.marketoracle.co.uk/Article21087.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-10 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on UK inflation, economy, interest rates and the housing market and he is the author of the NEW Inflation Mega-Trend ebook that can be downloaded for Free. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 500 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in