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BP Oil Spill

BP's share price has collapsed more than 40%
In this Monday, June 7, 2010 photo, APTN photographer Rich Matthews takes a closer look at oil from the Deepwater Horizon spill, in the Gulf of Mexico south of Venice, La. AP Photo/Eric Gay

BP's share price has collapsed more than 40%

June 9, 2010

NEW ORLEANS, Louisiana - BP's misery deepened Thursday as investors took flight for fear President Barack Obama will exact a heavy price from the British energy giant over the Gulf of Mexico oil spill.

With an angry American public digesting daily images of sorry-looking birds rendered flightless by the toxic crude, Obama is under fire over his handling of the crisis and has responded by ramping up the pressure on BP.

Shares plummeted 15.7 percent in early London trading as investors were spooked by concerns over the company's potentially skyrocketing liability and the possibility its prized shareholder dividend could be suspended.

Although it later recovered most of those losses, BP's share price has collapsed more than 40 percent since the Deepwater Horizon rig sank on April 22, wiping tens of billions of dollars off its market value.

The latest plunge came the day after US Interior Secretary Ken Salazar said BP's liability should include reimbursements for all companies that will be hit by the government's moratorium on deep sea drilling.

Asked during a Senate grilling if the government would force BP to pay for companies that go out of business, take bankruptcy or lay off workers, Salazar replied: "The answer to that is, yes, we will. BP is responsible."

Many in the Gulf region, which is heavily dependent on the oil industry, are furious at the moratorium and the Obama administration was strongly criticized by some for introducing the six-month moratorium.

Testifying before a separate congressional hearing, associate attorney general Thomas Perelli said the US Justice Department was "planning to take action" to force BP to withhold its next dividend payment.

Tensions over the disaster, fueled by a remark Tuesday from Obama that he wants to know "whose ass to kick," are threatening to spill over into the diplomatic arena.

British Prime Minister David Cameron said Thursday he intends to bring up the crisis with Obama in a telephone call at the weekend.

Obama, who heads to the Gulf next week for his fourth visit since the disaster, was to meet Thursday at the White House with relatives of 11 workers killed on the Deepwater Horizon rig.

"I think he's eager to discuss with them what their family was telling them about safety conditions and what type of changes can and must be made in the regulatory framework to ensure that deepwater drilling that goes forward is done in a way that is safe and not life-threatening," White House spokesman Robert Gibbs said.

During his testimony on Wednesday, Perelli also said the Justice Department was concerned BP may try to go into bankruptcy or split into several companies to prevent paying the full damages.

"It is an issue of real concern to us because we want to make sure that the responsible parties truly have the wherewithal to compensate the American people for the damage done," Perelli said.

"We are reviewing our options and hope to be able to report back to you soon about the action we'll take."

US Coast Guard Admiral Thad Allen, who is leading the government response to the disaster, met with BP officials on Wednesday and ordered them to produce records of compensation claims filed in four stricken southern states.

Allen also sent a letter to BP chief executive Tony Hayward, asking him to explain how compensation packages to devastated local industries were being calculated and why they were taking so long to process.

A separate letter ordered BP to inform the government of its contingency plans for its "top hat" containment system by Friday.

The device, placed last week over the blown out well some 50 miles (80 kilometers) off Louisiana, is capturing nearly 15,000 barrels, or 630,000 gallons, of crude a day, yet oil continues to pour into the Gulf.

Allen said modifications next week "could take leakage almost down to zero," while a special task group works up new estimates on how much oil is still gushing out.

But a more permanent solution will not come before two relief wells are due to be completed in August to plug the massive leak.

BP Oil Spill


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