# BP plc (BP)



## CanadianCapitalist (Mar 31, 2009)

I'd be curious with your opinions on BP, which is getting pounded mercilessly and with good reason. Of course, whether BP is a value stock at these levels depends on how much liability BP faces. The worst case scenario so far puts BP's final tab at $15B but BP has lost $70B in market cap. Comparable oil stocks have lost some value of late, so the entire loss in value cannot be attributed to just the oil spill.

It seems to me that BP still faces a lot of headline risk and perhaps even more important reputational risk. One report today suggested the stock's hefty dividend could be suspended until BP cleans up the oil spill. Investors may also be simply sick of owning BP. 

If the market overreacts to the troubles facing BP, it may become value priced. Question is: at what price would you find BP interesting, given all the risks the company faces?


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## the-royal-mail (Dec 11, 2009)

For me, it's not price but timing. I really don't think they're reached bottom, no pun intended. They have an enormous task before them, and they do not appear able to solve the problem. They're talking about August now. People are losing patience. A lot can happen in two months.

My own opinion would be to sit tight at the moment and keep tabs on what's going on for the next 3 months.


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## msimms (Apr 17, 2009)

CanadianCapitalist said:


> I'd be curious with your opinions on BP, which is getting pounded mercilessly and with good reason. Of course, whether BP is a value stock at these levels depends on how much liability BP faces. The worst case scenario so far puts BP's final tab at $15B but BP has lost $70B in market cap. Comparable oil stocks have lost some value of late, so the entire loss in value cannot be attributed to just the oil spill.
> 
> It seems to me that BP still faces a lot of headline risk and perhaps even more important reputational risk. One report today suggested the stock's hefty dividend could be suspended until BP cleans up the oil spill. Investors may also be simply sick of owning BP.
> 
> If the market overreacts to the troubles facing BP, it may become value priced. Question is: at what price would you find BP interesting, given all the risks the company faces?


15 billion cleanup tab, looking at the financial statements it sorta looks like a no sweat cost for them. 

according to http://www.bp.com/assets/bp_interne...rt_and_Accounts_2009_Financial_Statements.pdf

suspending dividends to stockholders for a year, and cutting capital expenditures by only 25% for one year will cover a 15 billion cleanup cost.
Company also doesn't appear to be servicing a massive amount of debt even if they have to use current earnings to clean up. plus they have another 8.3 in cash equivalents. 

if they couldn't cut expenditures by 25%, they could also issue some bonds, or dilute the common stock to raise some cash. 

lots of options for them to shake this crises off.


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## msimms (Apr 17, 2009)

a current stock price of $37.14 against a 2009 diluted EPS of $88.49? Is that right? something is not adding up.


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## humble_pie (Jun 7, 2009)

cc imho the situation is not comparable to when you nailed the low in shoppers with a perfect 30 (30 dollars 30 april.)

i did observe pundits recently saying buy as bp hovered between 40 & 45.

now it seems to be off all maps. Somebody - british analyst - reported as saying this am that bp has a death smell to it.

shoppers' rout was orderly, anticipated. My neighbourhood SC pharmacist told me he'd been planning economies & hour scalebacks for months. By contract, the stampede out of bp is like one of those soccer mobs where people get crushed to death. I for one wouldn't go near bp at any price until there is some clarity.

but i think we should all take note of cc's call. Like the 30/30 it's easy to remember. This one is june 1/37.


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## Potato (Apr 3, 2009)

msimms said:


> a current stock price of $37.14 against a 2009 diluted EPS of $88.49? Is that right? something is not adding up.


Well, if you read the annual report, that was given as _cents _per share, i.e. EPS of $0.88. The US-traded ADRs are each worth 6 BP shares, so the ~$37 figure is off EPS of ~$5.28 (the first bit of 2010 must have been good since Google is reporting $6.36).

There's a lot of uncertainty in the air right now, which tends to breed good value opportunities... however, this is an unholy mess they've caused, and direct cleanup costs, lost reserves, and punitive damages could be massive (and are still ticking up since the leak has not yet stopped!). I couldn't tell you at what price BP might become attractive, but I doubt the US courts could drive them right into bankruptcy, so there should be _some _bottom to it. Somewhere.


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## Max (Apr 4, 2009)

First compare to history:
http://en.wikipedia.org/wiki/Exxon_Valdez_oil_spill#Litigation_and_cleanup_costs

Exacerbating factors:
1) Exxon Valdez disaster cost approx $5B. BP disaster is almost certainly several times worse.
2) Political green movement likely to pressure government to take excessive action like dramatically increasing penalties retroactively
3) Current uncertainty over how the well will be plugged
4) BP has lost a lot of oil that could have been sold, and it will be very difficult for them to return the well to production.
5) Potential divided cut to fund cleanup costs

Mitigating factors:
1) BP was not entirely to blame. Transocean owned the rig, BP likely had partners on the well which may share a significant portion of the cost.
2) BP will recover some of the cost from insurance (the limit of liability is uncertain and probably insignificant compared to BPs total cost)
3) All BP's costs are tax deductible
4) Costs will be spread over many years, and the highest concentration of cash outflows will be right now as they plug the well, and many years in the future when the final court decision is made.
5) BP's financials are strong, and they have the ability to raise enough cash to fund the cleanup costs through asset sales, dividend cut, or stock or debt issuance.
6) New tax on all oil companies will pass the cost on to consumers while appearing to bill the oil companies. In order for BP to be penalized, the cost would have to be levied against BP only.
7) Downside price protection from dividend % yield (currently 9%), potential buyout by other oil companies, and Book Value per Share ($33).

Predictions:
-Dividend will be reduced temporarily.
-Price will continue to fall short term
-Government will raise the limitation of liability for oil companies retroactively to a surprisingly high amount
-The final bill for BP will be far less than anyone anticipated
-Life will go on and BP stock price will rise again, and deep sea drilling will go on under higher safety restrictions.


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## mogul777 (Jun 2, 2009)

What Max said. 

This is a total PR disaster for BP, they are the headline company here, the target. They also managed, with some help, to hamper future offshore drilling which will impact future returns. So that hurts their output, but big whoopdeedoo all they do now is jack up the price to compensate. 

Don't bother buying this POS until the storm starts blowing over, I'd guess you'll get it well under $30 and possibly under $25 before the worst is over. One thing investors don't like is a dividend cut, so even the ones with no conscience will run for the hills at that point. My interest would peak under $20, til then there are many other better investments to occupy time and money.


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## Berubeland (Sep 6, 2009)

I'm predicting $20 and that would be my buy point.


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## brad (May 22, 2009)

Related article in today's NY Times:

http://www.nytimes.com/2010/06/02/us/02liability.html

It's funny, before the spill BP was generally regarded as the greenest oil company on the planet. And it's worth remembering that, like pretty much all the other major "oil" companies, BP is actually a diversified energy company and petroleum is just one part of its business.


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## humble_pie (Jun 7, 2009)

pre-market 37.17 up on the day.


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## Sampson (Apr 3, 2009)

mogul777 said:


> So that hurts their output, but big whoopdeedoo all they do now is jack up the price to compensate.


Do you believe BP has the ability to manipulate the pricing on oil and gas by both altering production, supply and pricing?

http://www.petrostrategies.org/Links/Worlds_Largest_Oil_and_Gas_Companies_Sites.htm


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## CanadianCapitalist (Mar 31, 2009)

@humble: I'm not buying (I didn't buy SC either) BP. I'm just putting it on my watch list for my play money. BP is facing huge risks -- the Globe reported on the front page that BP may face criminal investigation. In the past, it has been profitable buying huge corporations in legal difficulties. Philip Morris (state lawsuits, punitive damages in civil lawsuits), AIG (surrounding Hank Greenberg's expulsion), Merck etc. were all buying opportunities when they were in the midst of their legal troubles. I wonder if that's the case with BP now.


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## davext (Apr 11, 2010)

I would invest in other energy companies that have been pounded at the same time and have no offshore drilling ventures in the US. At least we know that they're not actually responsible for the spill and they would not be affected by no legislation.


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## mario 1 (Nov 6, 2009)

I wouldn't touch this stock, who knows how much they will have to pay.
It's gonna be ugly for a long time.


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## michika (Apr 20, 2009)

Max said:


> First compare to history:
> http://en.wikipedia.org/wiki/Exxon_Valdez_oil_spill#Litigation_and_cleanup_costs
> 
> Exacerbating factors:
> ...



I believe BP was self insured on this particular project. 

I think that they're going to get nailed with the remediation costs for many years down the road. For instance here in Canada companies do have to go back to their (abandonned) wells, and sites years down the road to bring them up to current code.

Although I am aware that most US states have a Orphan Well/Site fund for when companies have gone under/sold/folded/etc. and there is work needing to be done.

Ultimately I agree with most predictions here; short term declines, with some long term recovery. I doubt the bottom will fall through on this one, but it will result in some large scale (probably only in the US) changes to drilling requirements, disaster mitigation planning, and there will probably be a severe limitation on offshore drilling in US waters for the foreseeable future.

Yet BP is still actively recruiting employees, but now they're offering bigger salaries and benefit packages for new hires.


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## Cal (Jun 17, 2009)

I thought this was an interesting fot for this thread:

http://www.holypotato.net/?p=838


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## mogul777 (Jun 2, 2009)

Sampson said:


> Do you believe BP has the ability to manipulate the pricing on oil and gas by both altering production, supply and pricing?
> 
> http://www.petrostrategies.org/Links/Worlds_Largest_Oil_and_Gas_Companies_Sites.htm


Yes, not alone of course, but thanks to "more difficult" supply sourcing price will be adjusted to compensate. Simple supply and demand dynamics.


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## osc (Oct 17, 2009)

I am considering selling Jan 2011 puts with a strike of $32. Right now they are $4. A quick $4000 for 1000 shares or I get the stock for $28 if it goes below 32 by Jan 2011. The most I can lose is $28k if it goes bankrupt.


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## Broke (May 11, 2010)

Berubeland said:


> I'm predicting $20 and that would be my buy point.


I had in my mind $15, we'll see how low it goes.


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## Cal (Jun 17, 2009)

I heard on CNN (link showing 12% of UK plans affected - http://www.economist.com/blogs/buttonwood/2010/06/dividends_and_bp) that 1 in 10 people in Britain have either a direct or indirect link to BP via equities, funds or pension plan holdings. So the effect of a dividend cut could be great on those expecting a payment for retirement and such.

I wonder if the US will levy a fine after the whole thing is cleaned up, or at least mostly cleaned up, as the effects will probably last for decades.

Regardless the politics involved could be interesting.


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## peterk (May 16, 2010)

Silly question, but what are the differences of the two BPs? One is on the NYSE and one is on the London exchange. It looks like they don't follow the same ups and downs. I'm new to this and didn't even realize companies can be listed on more than one exchange. Can someone explain this to me?


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## CanadianCapitalist (Mar 31, 2009)

BP ADS listed on NYSE is denominated in USD. BP stock listed in London is listed in Pounds. 1 ADR = 6 BP shares.

http://www.bp.com/investorhome.do?categoryId=132&contentId=2004195


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## krackerjack121 (Apr 4, 2009)

I personally think everything revolves around the dividend. I don't think that BP would be in huge trouble (other then optics) if they keep paying the dividend. They have many other sources of income to help pay for the current fiasco they are facing. And I don't think that they will cut there dividend either. Companies like this don't like cutting there dividend is my general feeling because then they lose all sorts of "money" (as far as stock price is concerned).

So now, I guess we just have to wait and see if they cut there dividend or not. I would imagine that would be the biggest determining factor.


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## michika (Apr 20, 2009)

I'm still waiting to see what deal BP will cut with Anadarko, as Anadarko is a minority partner in this well.


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## CanadianCapitalist (Mar 31, 2009)

I decided not to look into BP any further. I did a little bit of reading up on BP and it appears that among the majors BP has a reputation of cutting corners when it comes to safety and taking aggressive risks. Even without their current problems, BP doesn't sound appetizing as a long-term investment.


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## Dr_V (Oct 27, 2009)

CanadianCapitalist said:


> BP has a reputation of cutting corners when it comes to safety and taking aggressive risks.


reference?


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## CanadianCapitalist (Mar 31, 2009)

Dr_V said:


> reference?


CBC's Current Radio show

BP Cited for Worst OSHA Safety Violations Among U.S. Refiners


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## allgood (May 17, 2010)

I wonder how many "willful and egregious" violations it takes to shut a company down? This is very disturbing.


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## tojo (Apr 20, 2009)

The drop yesterday to $29 was under huge volume...looks like capitulation - short term at least. At $29, the yield is $11.6%. No doubt a dividend cut is priced in...I have to go a few years back to recall a stock/company so hated and despised. 

If I knew the dividend was safe, I wouldn't mind nibbling away at this, but if we all had that assurance, the stock wouldn’t be where it is. 

It’s déjà vu for me. Like March 2009, I remember looking at BMO, with a 10% yield at the time and thinking what a great opportunity, but will they cut the dividend? Ended up not pulling the trigger on it…


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## Sampson (Apr 3, 2009)

tojo said:


> It’s déjà vu for me. Like March 2009, I remember looking at BMO, with a 10% yield at the time and thinking what a great opportunity, but will they cut the dividend? Ended up not pulling the trigger on it…


I would say this is a little different.

BMO was facing a credit freeze and low prospects for revenue generation. BP faces cleanup costs, lawsuits, terrible optics an PR.


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## michika (Apr 20, 2009)

I'm out on BP as well. I've lost my taste for it.


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## the-royal-mail (Dec 11, 2009)

Wow they made the news for their dropping share price today. Good thing no one here invested last week.


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## timothius (Jun 7, 2010)

... and then it's up over 12% in one day. I've This is one stock I'm looking to pick up sometime in the near future, but my USD brokerage account isn't setup yet. <sigh></sigh>


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## Sampson (Apr 3, 2009)

the-royal-mail said:


> Wow they made the news for their dropping share price today. Good thing no one here invested last week.


That doesn't mean some of us weren't already long BP before this disaster.


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## mogul777 (Jun 2, 2009)

Obama has set BP as his primary target in this mess, so yes they will pay. How much remains to be seen. Sure he's primarily hot air and posturing, but he will get a few pennies. Pressure already exists to cut the dividend which I suspect will happen. The obvious rumours of bankruptcy have already surfaced as well though that is less likely at this time. It also doesn't help that "the spill" is twice as bad as they let on. 

This stock will be a trader's darling for the next while. Investors on the other hand will likely lose money as well as sleep with this stock. Traders should back up the truck and enjoy the ride.


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## humble_pie (Jun 7, 2009)

mohgge i am not thinking of any kind of truck.

in due course i may pluck out a diagonal call spread with surgical forceps, using 2012 leaps options as the long leg.


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## Toronto.gal (Jan 8, 2010)

Sampson said:


> That doesn't mean some of us weren't already long BP before this disaster.


I almost got it one day before the disaster struck, so it's pure luck that I don't own the stock today. Was lucky with Toyota also, almost got it and in the end, I went with Ford.


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## mogul777 (Jun 2, 2009)

humble_pie said:


> mohgge i am not thinking of any kind of truck.
> 
> in due course i may pluck out a diagonal call spread with surgical forceps, using 2012 leaps options as the long leg.


I always did like pie, lol.


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## Toronto.gal (Jan 8, 2010)

So, what type of 'cynic' are you? 

http://money.ca.msn.com/investing/deirdre-mcmurdy/article.aspx?cp-documentid=24542627


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## madeofglass (May 25, 2010)

My suspicion is this is going to blow over...

Fact #1: BP owned the well but Transocean was the drill operator. Halliburton also played a part in sealing the well. Enough blame to go around and this is going to be lawyered up for years to come.

Fact #2: Despite the US media's very biased spin on this, no BP employees died on the rig. The 11 that perished were all Transocean employees.

I think BP is doing its part with the clean up, but once the US govt. and other groups start filing lawsuits, BP will turn around and sue Transocean for poor safety and ops on the rig. It's not clear cut, but I think over the next few months Transocean will be blamed for this and not BP...I'm just waiting for BP to go lower before I snatch it up.


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## tojo (Apr 20, 2009)

Looks like BP is giving in to pressure from Obama - dividend suspension in the works. Not too suprising really:

http://www.timesonline.co.uk/tol/news/world/us_and_americas/article7148202.ece


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## HaroldCrump (Jun 10, 2009)

So based on Mr. President's national address last night, do you guys think objectively and reasonably that Obama may be leveraging the situation to make an example of BP and trying to score some presidential points for himself?
As the days go by, I find myself feeling a little sorry for BP and esp. since last night.
There is no doubt this is one of the worst ever natural disasters and the gulf coast will never be the same again - and it's not over yet.
There is no doubt that BP, and its partners in that rig, are responsible for negligence.
But I also think BP is being thrown under the bus and being made an example out to cover-up in other areas.
Obama is trying desperately to extend his honeymoon presidency that has been overshadowed by the continued economic crisis and the health care reform stagnation. He wants to appear more responsive than Bush did during the hurricane Katrina.

Also, this whole thing smacks of hypocracy.
Where were all these tears and bleeding hearts when corporations like Bank of America, Citigroup, AIG, etc. ripped the Americans out of trillions of dollars?
They want BP to set up an escrow "fund" to pay damaged and fines for this.
Why didn't they ask for a similar fund from the financial institutions?
Instead, they _took_ funds from the taxpayers and gave it to them.
I don't see the difference between negligence in running an oil rig vs negligence in banking/investments.
They say BP didn't have a contingency plan for taking care of such situation.
Did AIG or BoA have one?

It is ironical that BP has perhaps been the most responsible environmentally when compared to Shell, Exxon, etc.
They have contributed significantly to the wildlife preservation foundation, and have used "green" technology as a corporation and so on.

I'm not a shareholder in BP so doesn't affect me personally but is it only me who thinks this is double standards?


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## peterk (May 16, 2010)

It is ironic, the banks get rewarded for intentionally and greedily destroying the world economy - yet BP gets slammed for its negligent, though accidental, disaster.
I couldn't help but find it humourous reading the Globe yesterday with all the comments from the Exxon, Shell and Chevron execs - trying to downplay the risk of deepwater drilling and to throw BP under a bus for being irresponsible, and then in the next breath admitting they don't have any better plans for capping their own wells if something went wrong.

There was also an article in the Globe, though I can't find it at the moment, that said Obama had turned down some assistance from some european countries to help in the clean up. I for one feel Obama should be dropping the whole burn BP attitude, for now at least, and actually focus his entire might on cleaning up the oil - in particular stopping it from entering the Gulf stream, which if it does a whole new scale to this disaster will no doubt develop.

Still, in the battle of Obama vs. BP I think BP is going to come out victorious. I was planning on buying Exxon, but if BP drops much lower I'll really consider purchasing it aswell.


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## CanadianCapitalist (Mar 31, 2009)

I did not watch Obama's speech yesterday. It's possible that politicians want to make an example out of BP. But BP has Captain Clueless at the helm. Tony Hayward's leadership has been a disaster for BP. His media gaffes and BP's plodding response (at least that's the perception) has not helped matters one bit. I'm not a shareholder but I think BP has nobody to blame but itself for the mess it is in currently.


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## HaroldCrump (Jun 10, 2009)

It would be sad if this event brings about the liquidation and eventual downfall of a company like BP.
The downgrading of their credit rating is another nail in what is now becoming a coffin.
It's clear that Obama has totally got it in for BP.
I agree with the "creative destruction" process of capitalism but to put sick companies like AIG, BoA, etc. on life-support while deliberately murdering a healthy individual like BP is wrong.
Obama is simply spreading a stupid message by saying that BP will "pay for" all the costs related to this disaster.
I'm sorry, Mr. President, but even _you_ cannot pay for the full, real cost of this disaster.
The long-term effects of this cannot be measured in dollars, at least not in the PV of the entire net worth of the USA.

In reality, events like these are short lived in the social memory.
Remember how everyone (esp. Green Peace) was out with daggers against Shell during the great offshore spill in the North Sea what about 20 years ago?
And Exxon.

If Obama continues on this ego trip and makes BP pay billions of dollars, it will eventually be the end of BP.
I don't think they can recover from such a hit.
The brand name may stay on, but the company may be split off or bought out in pieces or such.
I see this as a shared responsibility between the govt. of the USA (under whose nose all this has been happening for 60 days now), BP, and all associated companies (someone mentioned Halliburton as well).
All these parties should jointly bear the costs.


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## slacker (Mar 8, 2010)

I bought some BP at $31.90 today. It's only 5% of my portfolio, but we'll see where this goes.


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## the-royal-mail (Dec 11, 2009)

What to do with your BP shares:

http://cawidgets.morningstar.ca/ArticleTemplate/ArticleGL.aspx?id=341134


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## james_57 (Jul 5, 2010)

*(moved this from the other thread)*

For those following the BP saga, some posturing going on here, but interesting article nevertheless.

THE British government is drawing up contingency plans for a possible collapse of BP.


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## james_57 (Jul 5, 2010)

Report: BP ponders Alaska asset sale to Apache

(AP) – 4 hours ago

LONDON — BP PLC is talking with Apache Corp. about possibly selling 12 billion pounds ($18 billion) worth of assets including a stake in Alaska's Prudhoe Bay oil field, The Sunday Times reported.


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## james_57 (Jul 5, 2010)

BP dropping like a rock on NO NEWS.

http://finance.yahoo.com/echarts?s=...=on;ohlcvalues=0;logscale=on;source=undefined

Speculation today abounds. Is it institutional profit taking, or is there shadow news circulating. (a fail etc)


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## Belguy (May 24, 2010)

To all of those who recently purchased BP stock and held it until today, congratulations!!!!


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## mogul777 (Jun 2, 2009)

And for anyone still holding be prepared to sell, sell, sell, lol. Remember this is similar to the economic recovery... stop the bleeding and have the long painful climb back up the hill. Assuming the leak is *FINALLY* plugged, BP still has the "long painful" part ahead. A good time to sell I suspect. You may want to read the disclaimer though as I have not actually analysed the stock so it could actually be a great buy still...


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## james_57 (Jul 5, 2010)

Another wrench thrown into _the story_ by Mathew Simmons (again). The mystery deepens, as to what this guy is all about. 


download the kingWorldnews mp3


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## Belguy (May 24, 2010)

Hope that I am not duplicating anything but I read in a recent Maclean's the following under the title 'What would Dilbert say?'

The massive Gulf Coast oil leak has turned petroleum giant BP into a global punching bag--all the more reason to invest while it's stock, like it's oil, is under water says Scott Adams, creator of the Dilbert comic strip. Adams advises investing in companies you detest. "I hate BP but I admire them, too, in a way I respect the work ethic of serial killers," he wrote in an essay. "If there's oil on the moon, BP will be the first to send a hose into space and suck on the moon until it's the size of a grapefruit. As an investor, that's the side I want to be on: with BP, not the loser moon."


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## james_57 (Jul 5, 2010)

Belguy said:


> Hope that I am not duplicating anything but I read in a recent Maclean's the following under the title 'What would Dilbert say?'
> 
> The massive Gulf Coast oil leak has turned petroleum giant BP into a global punching bag--all the more reason to invest while it's stock, like it's oil, is under water says Scott Adams, creator of the Dilbert comic strip. Adams advises investing in companies you detest. "I hate BP but I admire them, too, in a way I respect the work ethic of serial killers," he wrote in an essay. "If there's oil on the moon, BP will be the first to send a hose into space and suck on the moon until it's the size of a grapefruit. As an investor, that's the side I want to be on: with BP, not the loser moon."


That's probably as good an indication as any, why Scott Adams writes comic strips for a living, as opposed to say finance or investment editorials.


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## mogul777 (Jun 2, 2009)

james_57 said:


> That's probably as good an indication as any, why Scott Adams writes comic strips for a living, as opposed to say finance or investment editorials.


There's a difference?


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## james_57 (Jul 5, 2010)

mogul777 said:


> There's a difference?


Yes, comic strips make sense.


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## james_57 (Jul 5, 2010)

BP oil spill: failed safety device on Deepwater Horizon rig was modified in China

Blow-out preventer was sent to Far East at BP's request rather than overhauled in US

oops...


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## james_57 (Jul 5, 2010)

*Breaking news*

BP is doing the deal with Apache - 7 billion..


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## Belguy (May 24, 2010)

BP stock up approximately 33 percent in three weeks!!

Buy on any weakness. In five years, you'll be glad that you did!!!


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## mogul777 (Jun 2, 2009)

Belguy said:


> BP stock up approximately 33 percent in three weeks!!
> 
> Buy on any weakness. In five years, you'll be glad that you did!!!


Appears that's what people already did, lol. 

BTW, aren't you the guy worried about being more conservative with your investments? Why are you even interested in this risky POS company?


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## james_57 (Jul 5, 2010)

mogul777 said:


> Appears that's what people already did, lol.
> 
> BTW, aren't you the guy worried about being more conservative with your investments? Why are you even interested in this risky POS company?


 - return is 9%+ 
- PE = 6.5

rational:
-pension funds are heavily vested
-BP is TBTF (Britain politically can't afford it)
-BP will successfully weasel their way around this GOM liability problem
- If the Dow drops, let's say to 5,600 BP will weather that shock easier than the index.

Barring force majeure, current liabilities are not seen as anywhere near terminal, and are priced in.


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## CanadianCapitalist (Mar 31, 2009)

> -BP is TBTF (Britain politically can't afford it)


No such thing as TBTF, IMO. If push comes to shove, there won't be any bailouts for investors.


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## james_57 (Jul 5, 2010)

CanadianCapitalist said:


> No such thing as TBTF, IMO. If push comes to shove, there won't be any bailouts for investors.


I wasn't implying socializing of losses. BP is a sacred cow to the British and there's strong political will to keep BP not only alive but well. How many stocks can you say that about? If this were Shell Oil for example, it would be the same with the Netherlands, the Queen would be involved. Then there's the fact that BP to some extent relies on US leases, so the future supply side is based on a strong relationship between the two partners in war, not to mention their partnership in Iraq's oil fields. BP also has the contract to fuel the US military. These relationships are of national vital interest and they are trump cards. So there's going to be full cooperation between the USG and BP even if behind a public face of tension, to come thru this intact, and they will, barring some further upset. There is still the danger this GOM well could blow. Its not over until its over, and it ain't over.


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## mogul777 (Jun 2, 2009)

james_57 said:


> - return is 9%+
> - PE = 6.5
> 
> rational:
> ...


Plenty of people owned companies like Citi didn't stop it and similar stocks from becoming penny stocks. Of course anything already beaten down will fall less than the general market, that is common sense. Assuming of course that it doesn't go to zero. Which in this case is unlikely. I'm going to edit your "are priced in" comment to "was priced in".... perhaps. Perhaps not. Weasel through sure, priced in not so sure. This stock is still a gamble for a geezer investor. 

BTW, only an idiot would use previously reported numbers to value a company in a situation such as this.


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## james_57 (Jul 5, 2010)

mogul777 said:


> Plenty of people owned companies like Citi didn't stop it and similar stocks from becoming penny stocks. Of course anything already beaten down will fall less than the general market, that is common sense. Assuming of course that it doesn't go to zero. Which in this case is unlikely. I'm going to edit your "are priced in" comment to "was priced in".... perhaps. Perhaps not. Weasel through sure, priced in not so sure. This stock is still a gamble for a geezer investor.
> 
> BTW, only an idiot would use previously reported numbers to value a company in a situation such as this.


Of course its a gamble. Yes, _was priced in_ to mean the market is comfortable with the idea that a finite quantifiable loss is more likely than not. Its a perception, not a number and perceptions can change in a flicker. 

Idiot might be a bit strong. You can safely assume that BP will protect its share price in earnest, in troubled waters with predators about, and therefore uphold distributions. This week's fire sale of assets is meant to send a strong signal on balancing accounts.


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## james_57 (Jul 5, 2010)

mogul777 said:


> Plenty of people owned companies like Citi didn't stop it and similar stocks from becoming penny stocks.


Buying BP in these circumstances is placing a bet in the energy sector, in a high risk/reward company in crisis. Citigroup isn't pumping oil from one of the largest, richest oil deposits in the middle east, and its continuance isn't a vital national interest. 

As a disclaimer, I haven't placed the bet yet. I'm inclined to wait another week to see where this goes. Call me chicken.


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## kcowan (Jul 1, 2010)

james_57 said:


> ...As a disclaimer, I haven't placed the bet yet. I'm inclined to wait another week to see where this goes. Call me chicken.


The bets were being placed at $27. Now those that got in, are they out yet?


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## slacker (Mar 8, 2010)

I went in at $31.90, with 5% of my portfolio. Then I sold the profits, but kept it at 5%. The way I see it, there are 2 events I can look forward to:

1. The well being completely capped
2. When they start paying dividends again

I plan on selling it all on either of these events.


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## mogul777 (Jun 2, 2009)

james_57 said:


> Of course its a gamble. Yes, _was priced in_ to mean the market is comfortable with the idea that a finite quantifiable loss is more likely than not. Its a perception, not a number and perceptions can change in a flicker.
> 
> Idiot might be a bit strong. You can safely assume that BP will protect its share price in earnest, in troubled waters with predators about, and therefore uphold distributions. This week's fire sale of assets is meant to send a strong signal on balancing accounts.


"Change in a flicker" implies gamble, not investment. Like I said no business of a geezer looking to preserve his retirement. 

I say it like it is. I cannot safely assume anything, and neither can anyone else... beyond death and taxes.


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## mogul777 (Jun 2, 2009)

james_57 said:


> Buying BP in these circumstances is placing a bet in the energy sector, in a high risk/reward company in crisis. Citigroup isn't pumping oil from one of the largest, richest oil deposits in the middle east, and its continuance isn't a vital national interest.
> 
> As a disclaimer, I haven't placed the bet yet. I'm inclined to wait another week to see where this goes. Call me chicken.


I would wager a bet that your impression of BP's importance is exaggerated. 
Lacking conviction in your moves? You can't do that when playing with fire. Step up or step out or you will get burned.


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## james_57 (Jul 5, 2010)

mogul777 said:


> "Change in a flicker" implies gamble, not investment. Like I said no business of a geezer looking to preserve his retirement.
> 
> I say it like it is. I cannot safely assume anything, and neither can anyone else... beyond death and taxes.


Actually the word 'bet' implies a gamble, which is why chose the word in the first place. In my case, i'm not preserving my retirement, just being cautious in the face of global economic headwinds. 




> I would wager a bet that your impression of BP's importance is exaggerated.
> Lacking conviction in your moves? You can't do that when playing with fire. Step up or step out or you will get burned.


Thanks for the advise.


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## james_57 (Jul 5, 2010)

slacker said:


> I went in at $31.90, with 5% of my portfolio. Then I sold the profits, but kept it at 5%. The way I see it, there are 2 events I can look forward to:
> 
> 1. The well being completely capped
> 2. When they start paying dividends again
> ...


There won't be any dividends if the well isn't capped (permanently). My strategy originally, in late May was to buy just before the relief well completes, in say mid august. I figured it would be at its most uncertain then, and maybe lowest price. I just about pulled the trigger on $27 but decided to stick with the idea. So i expect it will dip into Aug going forward, but like mogal777 so politely insinuates, its an over-the-top risk play anyway. HAL would have been a lot safer and tracked the same. I was watching it similarly. 

The reason for being interested in BP (for me) is the future price of oil, and this is just one channel you may argue, but its a premium one, kinda like buying a Rolls at half price.


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## james_57 (Jul 5, 2010)

BP chief Tony Hayward 'negotiating exit deal'

_BP's chief executive Tony Hayward has been negotiating the terms of his exit, with a formal announcement likely within 24 hours, the BBC has learned.
_
http://www.bbc.co.uk/news/business-10753573


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## osc (Oct 17, 2009)

james_57 said:


> BP chief Tony Hayward 'negotiating exit deal'
> 
> _BP's chief executive Tony Hayward has been negotiating the terms of his exit, with a formal announcement likely within 24 hours, the BBC has learned.
> _
> http://www.bbc.co.uk/news/business-10753573


His deal should be 5 years in jail, instead of life.


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## james_57 (Jul 5, 2010)

osc said:


> His deal should be 5 years in jail, instead of life.


5 years of community service, wiping oil off delta swamp grass with paper towels... exactly like they paid people to do for the presidential photo ops. Let him experience the total destruction and repeat for himself the cleanup charade lunacy first hand. And offer him a mask... see if he uses it. Its the least we could do, since he would be dead or dying within a decade thereafter anyway.


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## Belguy (May 24, 2010)

I heard one energy analyst on CBC's 'The National' tonight predict that a Chinese energy company would purchase BP and then sell off BP's North American assets further stating "at that time, the stock will soar".

One potential scenario.


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## krackerjack121 (Apr 4, 2009)

Well, it appears as though BP won't be going bankrupt anytime soon. And has seen a nice recovery in there share price. I bought in around $33.00 and have seen about a 25% return so far. 

What have others done and what are others thoughts on the situation a few months out after the well was sealed.


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## PMREdmonton (Apr 6, 2009)

*BP*

The giant British oil producer is now paying dividends again and the Gulf Coast spill looks like it's not going to kill the company.

However, the stock seems to have been really beat up and is now trading at $36 again.

I'm thinking about going fairly heavy into this.

Anyone have any idea why they have fallen so much lately?


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## KaeJS (Sep 28, 2010)

PMREdmonton said:


> Anyone have any idea why they have fallen so much lately?


I don't think they've fallen drastically in comparison to other companies.

It looks neutral to me (the decrease in price). I'm going to say its just at $36 due to slower economic growth and debt concerns.

My 2 cents (if its worth 2 cents):

I'd buy it - but not yet.

It's probably going to go lower. Nice dividend. 

Aside from RY.TO, BP is also on my Watchlist. I have limited myself to these two stocks, even though there are a ton I would love to purchase.


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## PMREdmonton (Apr 6, 2009)

KaeJS said:


> I don't think they've fallen drastically in comparison to other companies.
> 
> It looks neutral to me (the decrease in price). I'm going to say its just at $36 due to slower economic growth and debt concerns.
> 
> ...


Those two interest me, too.

I'm waiting at $45 for RY.

I'm waiting for $32-33 for BP.


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## Lena100 (Mar 16, 2014)

*BP*

Since the troubles are behind this stock, would like to hear what people think of this stock right now


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