From the British Pen

A lot of folk have been trying to convince me that pension funds are dividing Americans from their friends across the pond. I think a lot of it is media driven, a common phrase I don’t use very often. Maybe I should.

If you ask me, you shouldn’t gamble with retirement. If your savings are investing, that isn’t the same as a savings account. Risk is risk. Anyhow, have fun reading the Guardian,

In the 59 days since the oil leak in the Gulf of Mexico, Hayward has been transformed into one of the most hated men in the US, and the ferocity of the encounter between him and the House of Representatives committee on energy and commerce was much-anticipated. As one committee member noted: “The anger at BP is at fever pitch. It’s almost palpable.”

The committee has been conducting an aggressive inquiry into the gusher, and called Hayward in to answer specific charges of suspected safety lapses and shortcuts in the design plan of the well in the days before the explosion on the ill-fated Deepwater Horizon rig.

But Hayward, who had been carefully coached by legal and media teams and was testifying under oath, failed to satisfy.

“The committee is extremely frustrated with your lack of candour,” Bart Stupak, who is leading the investigation told him. “You are the CEO. You have a PhD. We hope you have more candour in your responses.”

The reprimand was just a taste of the rancour towards Hayward. He was told by angry committee members that BP had a history of cavalier disregard for environmental rules and workers’ safety.

Hayward’s claims to have ushered in a new regime of safety after taking over as chief executive of the company in 2007 were plainly ridiculed.

“When I heard of the explosion in the Gulf, the name that immediately popped into my mind was BP,” said Stupak.

read more.

Holy Crap That’s a Lot of Money: 34 Billion in Fines

The Guardian reports quite a heavy bill for BP, and this may really set a buzz for the President’s fist Oval office speech tomorrow.

BP is facing a bill of up to $34bn from the Gulf of Mexico disaster after US senators demanded the oil company deposited $20bn into a ring-fenced account to meet escalating compensation costs.

The sum dwarfs many analysts’ previous estimates, shared by BP, that put the cost of the clean-up effort and payment of damages to affected communities, such as fishermen, closer to a total of $5bn.

Shares in BP nose-dived by more than 9% today as investors took fright at the demand by the 54 Democratic senators, who represent a majority in the US upper house. The company is now worth almost half what it was before the accident of just under two months ago.

BP already faces up to $14bn in civil penalties, payable under US environmental law, assuming the leak is plugged in August. These punitive damages are directly linked to the size of the spill – already estimated at being up to eight times worse than the Exxon Valdez disaster in 1989 – with BP liable for up to $4,300 for each barrel-worth spilt.

Senate leaders insisted the $20bn ring-fenced account should be exclusively for “payment of economic damages and clean-up costs” and should not be seen as a cap on BP’s other legal liabilities. With punitive damages pending too, the theoretical total of $34bn is equivalent to more than half the corporation tax paid by all British companies last year.

Tony Hayward, chief executive of BP, and other directors of the company, will meet Barack Obama at the White House on Wednesday prepared to offer concessions in the hope of taking the sting out of mounting political attacks on the company.

BP will be in “listening mode”, willing to cut its next dividend, worth about $2.5bn, possibly paying the cash into the clean-up fund. It will also reiterate its commitment to paying all legitimate claims arising from the disaster. But the company does not believe that the demand by the senators to stump up $20bn is justified.

read the rest at the Guardian

Offshore Oil Back in Business, With a Few New Rules

Looks like somebody read Gov. Bobby Jindal’s letter. President Obama is soon to announce the new rules for moderate depth off shore drilling as early as this week, lifting the freeze on coastal exploration. You may recall a spokesperson for BP this weekend called the halt on exploration sensible, but hoped for a quick prognosis and reform in order for the industry to plan for the future. The White House didn’t miss a beat. Let’s hope when it comes to the bigger depths they include a mandatory relief well to accompany production as they do in some parts of Canada. Response Coordinator Admiral Thad Allen suggested that was a good idea just yesterday.

WASHINGTON—The Obama administration, facing rising anger on the Gulf Coast over the loss of jobs and income from a drilling moratorium, said Monday that it would move quickly to release new safety requirements that would allow the reopening of offshore oil and gas exploration in shallow waters.

Gulf Coast residents, political leaders and industry officials said delays in releasing the new rules, along with the administration’s six-month halt on deepwater drilling—both issued amid public pressure—threatened thousands of jobs.

Well-owner BP PLC, meanwhile, faces penalties “in the many billions of dollars,” for the Deepwater Horizon drilling disaster that has been spewing an estimated minimum 12,000 to 19,000 barrels of oil a day into the Gulf, said White House Press Secretary Robert Gibbs. The costs of the spill will “greatly exceed” the amount BP could recoup by selling any of the captured oil on the market, he said Monday.

read more at WSJ

Take Overs, Bond Values, Stock Drops, and BP’s Future

With all this oil in the Gulf, all the terrifying pictures, footage, and reports its easy to forget the real victim here. That’s right, I’m talking about a sensitive affluent little business with a previously bright future, British Petr-  I mean Beyond Petrolium. Once the most profitable company in the entire history of the world, BP now faces stock slides, falling credit and bond ratings, and a possible death by cannibalism.

The downturn began on Tuesday, after BP’s “top kill” plan failed to block a massive leak in the Gulf of Mexico by pumping mud into the well.

But BP’s bonds continued to fall even as its shares recovered on Wednesday.

Meanwhile, rating agency Fitch has cut the firm’s credit rating marginally, and threatens further downgrades if the cost of the oil leak rises further.

Fitch cut BP’s rating by one notch, from AA+ to AA, although this is still one of its highest investment grade credit ratings.

Borderline junk

The other two main rating agencies – Moody’s and Standard & Poor’s – also still rate BP’s creditworthiness highly, at Aa1 and AA respectively.

Yet bond markets are now pricing BP’s debts at levels comparable with much riskier “junk” rated companies.

The oil company’s main five-year dollar bond was trading on Thursday at a yield of 5.5% – some 3.25% more expensive than the interest rate that the US government would have to borrow at.

Yet before the weekend, the same BP bond was trading at a yield of 3.5%, meaning its borrowing cost has jumped by 2% as a result of the failure to plug the oil leak.

One City analyst told the BBC that the bond markets’ fears made no sense, because BP has so little debt.

BP owes £14bn in total debts, whereas stock markets currently value the company at £84bn.

read more at the BBC

With a looming bills, suits, and fines to stack on the one billion dollars the company hs already spent on the disaster, and a 1-5 thousand dollar fine per barrel, one has to wonder how this company could fend off its competitors who would like nothing more to consume their business. Check out their new ad, and take a good look at it’s narratar, BP CEO Tony Hayward, because he might not be the face of the company for long.