According to The Wall Street Journal, scientists have estimated that 62,000 barrels of oil per day, or approximately 4.9 million barrels in total, leaked into the Gulf of Mexico due to the blowout of BP’s Macondo well. Estimates have varied widely over the course of the disaster and it is not possible to come up with a precise figure for the leak. BP is currently preparing to permanently kill the well through a combination of a “top kill” maneuver and the completion of two relief wells. Under the Clean Water Act, BP will be fined at least $1,100 per barrel, but the figure could rise to $4,300 per barrel if the company is found to be “grossly negligent”. Read this article for more details.
On Thursday, June 17, BP CEO Tony Hayward will testify before the House Committee on Energy and Commerce. In preparation for the testimony, the Committee Chairmen sent Mr. Hayward a letter listing a series of alleged procedural lapses that could have contributed to the Deepwater Horizon disaster. The letter is worth reviewing because it raises issues regarding the general safety of deepwater drilling and steps that should be taken prior to lifting the moratorium. Read this article for more details.
Whitney Tilson is convinced that BP is simply too cheap to ignore at current valuations. Given the steady stream of negative headlines due to the massive Deepwater Horizon oil spill, BP shares are quickly approaching a 45 percent discount to the stock price that prevailed during much of April. Mr. Tilson makes it clear that BP shares could certainly fall even further, but he believes that the dividend should be safe. Read this article for more details and to view Whitney Tilson’s comments.