BP Shares Dive as Leak Continues

The most recent failure to cap the Gulf of Mexico oil leak has sent BP's shares tumbling 15.2 percent in early trade on Tuesday. According to MarketWatch, this translates into a market capitalization loss of $15.4 billion. Since the Deepwater Horizon disaster on April 20, BP lost over a third of its value. This considering the company is now contemplating 990 million dollars (811 million euros) in costs linked to the spill.

"The cost of the response to date amounts to about 990 million dollars, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs," BP said in a statement cited by AFP.

"It is too early to quantify other potential costs and liabilities associated with the incident."

And the outlook is even grimmer. With the most optimist estimates saying the spill will be contained as late as August, the effects of the 29.5 million gallons which have poured into the Gulf waters take their toll on more than BP's shares.

For BP, the situation is so critical some have come to believe the British giant will not survive the spill. According to investment bank Arbuthnot Securities, BP may end up breaking up or become a takeover target.

"There has been much speculation regarding both Tony Hayward’s future at the company and the possibility of the dividend being cut,” Arbuthnot analyst Dougie Youngson told Business Week. “The situation is beyond both of these points and the key question is now ‘can BP survive?”

“We are very negative on the prospects for BP and this situation has a real possibility of breaking the company,” Youngson added. “Given the collapse in the share price and the potential for it to fall further we expect that it could become a takeover target -- particularly if its operating position in the U.S. becomes untenable.”
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About the author: Daniel Patrascu
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Daniel loves writing (or so he claims), and he uses this skill to offer readers a "behind the scenes" look at the automotive industry. He also enjoys talking about space exploration and robots, because in his view the only way forward for humanity is away from this planet, in metal bodies.
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