BP: Our Stock? Fine!
This might be my favorite headline of the entire Gulf oil disaster, and it’s from BP’s corporate site: BP is Not Aware of Any Reason for Share Price Movement.
Yeah, I can’t imagine why investors wouldn’t want to hold BP stock right about now. It seems so logical!
Maybe it’s the fact that their consistent lies about the amount of the spill are being exposed, now that they’re bringing in at least 15,000 gallons a day up from the containment dome and the leak is continuing. The 100,000 gallons a day theory looks more and more true, and that has a direct impact on the size of the penalties BP will have to pay under the Clean Air Act, to say nothing of other violations being probed by the Justice Department.
Or maybe investors saw the internal BP report warning about accidents, and can see how this could be used as evidence of criminal neglect, in some cases tripling those fines.
Or maybe analysts are simply totaling up the costs associated with the spill, costs which will last decades, as anger in the public and even in the White House rises. Maybe they are looking to prior precedent:
This outcome might seem far-fetched right now. But on Wall Street bankers have already coined a term for it: “the Texaco scenario.”
In 1987, Texaco was forced to file for Chapter 11 because it could not afford to pay a jury award worth $1 billion to Pennzoil. That award had been knocked down by a judge from a whopping $10.53 billion. (Pennzoil successfully sued Texaco for “jumping” its planned merger with Getty Oil, in part, by moving the case to local court near its headquarters. The jury awarded triple damages.)
Imagine the BP case playing out in a Louisiana courtroom, against the backdrop of an oil-choked local economy, high unemployment and an angry public. How high can you count?
Yeah, I can’t imagine why anyone would think that BP faced a little rough sledding.
It’s sometimes hard to make a distinction between BP’s PR department and BPGlobalPR.