BP’s shares slipped to a 14-year low this week. A tropical storm hampered clean-up efforts and investors fretted over further setbacks, such as a hurricane or the failure of the relief well to stop the gusher.
The well is expected to be ready in mid-July. Since April, when the original deep-sea well blew up, around 15 times the amount of oil that leaked from the Exxon Valdez is estimated to have been spilt. The Russian deputy prime minister said chief executive Tony Hayward was about to resign and name a successor, a claim BP rebuffed. A JPMorgan Cazenove report mooted a takeover of BP by Exxon.
What the commentators said
BP should keep “a watchful eye” on Russia, said Dominic O’Connell in The Sunday Times. The joint venture with Russia’s TNK, which comprises 15% of profits, has been dogged by squabbles over control with the Russian shareholders. “The last thing BP needs now is for a second front to open.” Two years ago, Robert Dudley, who has now been put in charge of the Gulf clean-up efforts, was ousted from TNK-BP after a spat with the Russians, noted wsj.com. It seems the Russians were warning BP not to name him as Hayward’s successor.
Meanwhile, it was inevitable that investment bankers would start seeing BP as a takeover candidate, said Alex Brummer in the Daily Mail. They “smell fat advisory and financing fees”. But don’t expect a bid soon, said Damian Reece in The Daily Telegraph. If things get worse for BP, the shares will slide further, so the predator might as well wait. If they improve, why would shareholders want to share the upside from a strengthening share price with anyone else?
BP: 328p; 12m change -37%