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BP's Nightmare

    📂 Business,Environment     # , ,     🗨 No Comments

BP logoThere seems to be no end in sight for BP's plight. The oil well is still gushing, the stock is bleeding, and there's word of a criminal investigation.

BP's stock got hammered today to the tune of $20 billion. It also doesn't help that BP is a European company and Europe is still grappling with its serious financial malaise. Since April 20, the day of the rig explosion, the stock has lost some $75 billion. If BP keeps its dividend payout steady, the current price of $36.50 a share is a fantastic bargain, yielding 9.2%. Of course there's little chance of realizing that. It's quite possible that BP will stop paying dividends entirely as it will need every dollar to deal with countless liability suits pursuant to the biggest oil disaster in US history.

The contrarian view would consider BP's stock attractive at these levels and it may be a correct view. But BP's problem is far greater than what Toyota had to contend with a few months ago. Surely BP can see the dark clouds coming its way. It had better cork that well soon while there's still a chance to survive the mountain of lawsuits it will have to deal with in the aftermath.

P.S. Somewhere out there Mohammad Mosaddegh is looking down at BP's misfortune and smiling broadly. It's payback time.

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