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jesusfreakinco (29.55)

BP deserves to die... latest articles and an open thread

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June 13, 2010 – Comments (18) | RELATED TICKERS: BP , D , EAD

A few articles to chew on regarding BP...

Obama urged to 'punish' BP with $100bn action

"A source close to the politicians said: "There are US congressmen who understand the heartbeat of the Obama administration that are looking at [Texaco]. There is a real chance – 30 per cent, perhaps a bit more – that BP cannot survive."

"Senior US politicians are pushing President Barack Obama to seek $100bn in damages against BP for the Gulf of Mexico oil spill in an attempt to kill the company."

http://www.independent.co.uk/news/business/news/obama-urged-to-punish-bp-with-100bn-action-1998853.html

BP May Lose U.S. Oil Leases, Contracts as Gulf Spill Punishment

" BP Plc may lose control of its U.S. oil and natural gas wells and be barred from doing business with the federal government as punishment for the worst oil spill in U.S. history, industry and regulatory analysts said."

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUEvCDKBmN.k&pos=4

Does BP survive?   I am guessing one way or another Obama makes a political statement in an election year and destroys BP.  What say you?

JFC

 

18 Comments – Post Your Own

#1) On June 13, 2010 at 10:31 PM, BurntTiger (34.14) wrote:

i think the UK will swing a big stick to prevent that from happening.  BP wont die

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#2) On June 13, 2010 at 10:38 PM, jesusfreakinco (29.55) wrote:

Obama Plans First Oval Office Speech to Put Pressure on BP

"Administration officials said that since last week, White House lawyers have been researching Mr. Obama’s legal authority to compel BP to set aside money for claims, based on the 1990 Oil Pollution Act."

http://www.nytimes.com/2010/06/14/us/14spill.html?pagewanted=2&hp

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#3) On June 13, 2010 at 10:40 PM, jesusfreakinco (29.55) wrote:

"This is the kiss of death for the dividend. This may mean that BP’s US assets are encumbered in some way. Should it work out that there is a form of conservatorship in the works it would be without precedent."

"It is clear that the gutting of this company is going to have far reaching impacts to investors and pensioners.

It looks like the Coast Guard is going to take over operations this week. That will be the beginning of the “big blank check “for BP."

http://www.zerohedge.com/article/gom-bp-and-jones-act

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#4) On June 13, 2010 at 10:58 PM, jesusfreakinco (29.55) wrote:

"All the actions and few tid bits of information all lead to one inescapable conclusion. The well pipes below the sea floor are broken and leaking. Now you have some real data of how BP's actions are evidence of that, as well as some murky statement from "BP officials" confirming the same."

"It means they will never cap the gusher after the wellhead. They cannot...the more they try and restrict the oil gushing out the bop?...the more it will transfer to the leaks below. Just like a leaky garden hose with a nozzle on it. When you open up the nozzle?...it doesn't leak so bad, you close the nozzle?...it leaks real bad, same dynamics."

"This down hole leak will undermine the foundation of the seabed in and around the well area. It also weakens the only thing holding up the massive Blow Out Preventer's immense bulk of 450 tons."

"These are clear and present dangers to the battered subsea safety structure (bop and lmrp) which is the only loose cork on this well we have left. The immediate (first 1,000 feet) of well structure that remains is now also undoubtedly compromised. However.....as bad as that is?...it is far from the only possible problems with this very problematic well. There were ongoing troubles with the entire process during the drilling of this well. There were also many comprises made by BP IMO which may have resulted in an overall weakened structure of the entire well system all the way to the bottom plug which is over 12,000 feet deep. Problems with the cementing procedure which was done by Haliburton and was deemed as “was against our best practices.” by a Haliburton employee on April 1st weeks before the well blew out"

"What is likely to happen now?"

" If and when you begin to see oil and gas coming up around the well area from under the BOP? or the area around the well head connection and casing sinking more and more rapidly? ...it won't be too long after that the entire system fails. BP must be aware of this, they are mapping the sea floor sonically and that is not a mere exercise. Our Gov't must be well aware too, they just are not telling us."

"It's a race now...a race to drill the relief wells and take our last chance at killing this monster before the whole weakened, wore out, blown out, leaking and failing system gives up it's last gasp in a horrific crescendo"

 

http://www.theoildrum.com/node/6593#comment-648967

All I can say it wow...  Must read for all BP investors - long and short.  Scary, scary stuff...

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#5) On June 13, 2010 at 11:00 PM, jesusfreakinco (29.55) wrote:

Link to that article...

http://www.theoildrum.com/node/6593#comment-648967

 

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#6) On June 13, 2010 at 11:16 PM, jesusfreakinco (29.55) wrote:

 "In his showdown Wednesday with BP's top executives, President Obama will demand that they turn over a "substantial" amount of money to an independent mediator who will handle claims from people and businesses harmed by the environmental disaster, administration officials said Sunday"

"The White House wouldn't say how much money it wants BP to put in the new escrow account, but Senate Democrats named their number Sunday, sending a letter to BP asking it to create a $20 billion fund to handle economic damages and cleanup costs."

"Behind the scenes, the situation is much tenser. The administration, under immense political pressure to show that it's fully in charge, is pressing BP to fully clean up the mess both environmentally and economically. BP, however, fears any plan going forward that would create a potentially unlimited liability."

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/13/AR2010061302197.html?hpid=topnews

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#7) On June 13, 2010 at 11:35 PM, awallejr (80.10) wrote:

What is the point of trying to kill BP as a company?  All this sabre rattling before we even know what the ultimate financial damages are is silly.  I am getting tired of the Obama bashing BP routine.  That is not leading, that is politics. I want a true leader to DEAL with the situation, not just finger point.  Take control of the cleanup effort.  Militarize it as a national disaster.  But Obama hasn't.  He blew it as a leader in my opinion.

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#8) On June 13, 2010 at 11:49 PM, jesusfreakinco (29.55) wrote:

awallejr

He blew it as a leader in my opinion.

Not going to get an argument from many on this point.  If this are as bad as some of these articles (you must read the oildrum article linked above), the SHTF soon and he resides over perhaps the greatest environment disaster of all time.  Just wait.  I fear we haven't seen nothing yet.  The bashing between US and UK will reach epic proportions soon.  Black Swan #1.

And... for those of you, like I, that believe that currency swaps have been made to prop our bond market... what happens when we piss of one of our most 'trusted' allies and their banking system.  The system could unwind very quickly.

Got gold?

JFC

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#9) On June 13, 2010 at 11:57 PM, SockMarket (87.07) wrote:

in terms of killing the company: they can probably issue debt at 6%, in which case $100B wouldn't kill them, but would shrink their earnings by 50-65%

Of course this is based on 3 min or "research" so those #'s could be way off. Regardless, I don't think they will die as a result of this. 

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#10) On June 14, 2010 at 12:07 AM, jesusfreakinco (29.55) wrote:

"Fifty-four Democratic senators wrote to BP's chief executive, Tony Hayward, demanding that BP put an initial $20bn into a ring-fenced fund. Although BP has pledged to pay clean-up costs and damages, "history has taught us that corporations often fail to live up to their initial promises", the lawmakers wrote. They demanded a response by Friday."

"It has to be substantial enough to meet the claims that we expect to come," he told NBC's Meet the Press. "We need to make sure the interests of people in the Gulf are protected. Our mission is to hold [BP] accountable in every appropriate way... And we want to make sure that money is independently administered so that [they] won't be slow-walked on these claims."

http://www.independent.co.uk/news/world/americas/white-house-turns-up-heat-on-bp-with-flurry-of-new-demands-1999651.html

danielthebear

If it weren't this admin with all the egg on their face, I might agree with you that BP could survive.  However, I think they don't and my chips are on the table.

I see new lows in BP coming this week.

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#11) On June 14, 2010 at 12:09 AM, jesusfreakinco (29.55) wrote:

This says it all...

"Why the shift? The White House is beginning to realize that the political fallout of the oil spill is very real -- and holding office for a year and a half makes it harder to blame the previous administration for evident shortcomings."

http://abcnews.go.com/WN/Media/world-news-political-insights-president-obama-seeks-control/story?id=10903945

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#12) On June 14, 2010 at 12:20 AM, SockMarket (87.07) wrote:

im just saying that based on $100B in costs asociated with this they could make it. Not that they will.

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#13) On June 14, 2010 at 12:23 AM, jesusfreakinco (29.55) wrote:

"BP is considering putting several billion dollars into a ring-fenced clean-up fund to appease American concerns over the soaring cost of the Gulf of Mexico oil spill. The fund is one of several options to be put to the company’s board tomorrow ahead of a meeting on Wednesday between Barack Obama and Carl-Henric Svanberg, BP’s chairman."

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7148985.ece

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#14) On June 14, 2010 at 12:26 AM, jesusfreakinco (29.55) wrote:

danielthebear

Perhaps... We'll see.  Bond and debtholders also have to be willing to loan $ to them.  If the seafloor opens, all bets are off and they file within a week.  I think this possibility is why Obama is changing his rhetoric.  Loss of confidence may trigger things.  The Dems are fired up and their pressure may cause a loss in confidence.

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#15) On June 14, 2010 at 12:34 AM, jesusfreakinco (29.55) wrote:

"Experts accused BP of making a "fatal miscalculation" in failing to realise the extent of the leak earlier on, saying that inaccurate calculations had prevented them from getting to grips with the problem."

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7821462/BP-oil-spill-clean-up-costs-could-total-6bn.html

 

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#16) On June 14, 2010 at 12:39 AM, jesusfreakinco (29.55) wrote:

"However, the longer-term liabilities are a different issue, becoming almost unlimited should any criminal negligence be proved. The fact that chief executive Tony Hayward's pen is potentially hovering over a blank cheque has led the cost of insuring BP debt to rise to record levels and some to suggest that its US unit is better off in bankruptcy protection."

"BP's unquantifiable costs over the next few months to years fall into four key areas: clean-up, immediate compensation to workers, civil legal suits and criminal fines."

"Then there are fines under the Clean Water Act, currently fixed at $4,300 per barrel. If the flow has been running at 40,000 barrels a day, as new estimates suggest, the total would be more than $9bn."

"If counter-parties began to back away from BP, it is unclear exactly what the short term cash implications would be. There is a risk that credit downgrades would trigger letter of credit provisions that would require BP to put up more collateral or be forced to close trading positions. Either would lower available cash and scare the market."

"America is not going to take any chances. There is a precedent for the bankruptcy of a big oil company in America, when Texaco was unable to meet a $1bn legal bill in 1987 and spent most of the year under protection before being sold off to Chevron"

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7822535/BP-oil-spill-can-the-UK-energy-giant-afford-to-pay-the-bill.html

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#17) On June 14, 2010 at 9:59 AM, jesusfreakinco (29.55) wrote:

BP oil spill: Canada suspends licenses for deepwater drilling

More impact of BP oil spill...

"The Gulf episode has sent alarm bells ringing for governments anxious to play host to oil companies wanting to move into the industry's final exploration frontiers – deep water offshore exploration."

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7825220/BP-oil-spill-Canada-suspends-licenses-for-deepwater-drilling.html

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#18) On June 15, 2010 at 1:11 AM, jesusfreakinco (29.55) wrote:

Congress letter to BP:

 

http://online.wsj.com/public/resources/documents/WSJ-20100614-LetterToHayward.pdf

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