Papa Scooterbug forwarded this on - he got it from his stockbroker.
Thought the analysis of liability and who was involved etc. was interesting, though don't know that I agree based on the way everyone is frothing to sue BP and blame them for everything including the drink they dropped when they heard the news.
After the Gulf disaster. Wall Street was too hard on BP and Transocean
"The market values of the affected companies have declined by a total of more than $40 billion since the spill on April 20. That seems very high relative to the potential cost of the cleanup, economic damages and fines.
In a note on BP (ticker: BP) Friday, Bernstein analyst Neil McMahon wrote that the recent loss of $25 billion in BP's market cap is "extreme" relative to a potential worse-case cost of $12.5 billion for the spill, of which BP's share is roughly $8 billion before tax benefits. Other analysts have put lower cost estimates
on the spill. BP has a 65% interest in the field with Anadarko Petroleum (APC) holding a 25% stake and Japan's Mitsui, 10%. Transocean (RIG) owned the deep-water Horizon rig that was destroyed in a gas-related explosion, killing 11 workers.
Transocean initially showed little reaction to the disaster because BP, as the operator of the rig, takes prime responsibility for the costs of the spill and because Transocean has insurance for the rig, which has an estimated value of about $500 million, plus $700 million of environmental liability insurance. Investors then began to worry that the explosion and spill could have been caused by errors by Transocean, as well as equipment failure.
Cameron International (CAM), the maker of a blowout preventer that may not have operated as designed, saw its shares fall almost eight points to 39.46 last week, cutting about $2 billion from its capitalization. Halliburton (HAL), which was involved in cementing the well, also got hit, dropping four points to 30.62 and losing more than $3 billion from its value. Cameron and Halliburton are down but they aren't cheap stocks, trading for 17 and 20 times estimated 2010 profits, respectively.
While there could be damaging political and financial repercussions from the spill, Wall Street may have overreacted, and that could mean opportunity in shares of BP, Transocean and other affected companies."
Thought the analysis of liability and who was involved etc. was interesting, though don't know that I agree based on the way everyone is frothing to sue BP and blame them for everything including the drink they dropped when they heard the news.
After the Gulf disaster. Wall Street was too hard on BP and Transocean
"The market values of the affected companies have declined by a total of more than $40 billion since the spill on April 20. That seems very high relative to the potential cost of the cleanup, economic damages and fines.
In a note on BP (ticker: BP) Friday, Bernstein analyst Neil McMahon wrote that the recent loss of $25 billion in BP's market cap is "extreme" relative to a potential worse-case cost of $12.5 billion for the spill, of which BP's share is roughly $8 billion before tax benefits. Other analysts have put lower cost estimates
on the spill. BP has a 65% interest in the field with Anadarko Petroleum (APC) holding a 25% stake and Japan's Mitsui, 10%. Transocean (RIG) owned the deep-water Horizon rig that was destroyed in a gas-related explosion, killing 11 workers.
Transocean initially showed little reaction to the disaster because BP, as the operator of the rig, takes prime responsibility for the costs of the spill and because Transocean has insurance for the rig, which has an estimated value of about $500 million, plus $700 million of environmental liability insurance. Investors then began to worry that the explosion and spill could have been caused by errors by Transocean, as well as equipment failure.
Cameron International (CAM), the maker of a blowout preventer that may not have operated as designed, saw its shares fall almost eight points to 39.46 last week, cutting about $2 billion from its capitalization. Halliburton (HAL), which was involved in cementing the well, also got hit, dropping four points to 30.62 and losing more than $3 billion from its value. Cameron and Halliburton are down but they aren't cheap stocks, trading for 17 and 20 times estimated 2010 profits, respectively.
While there could be damaging political and financial repercussions from the spill, Wall Street may have overreacted, and that could mean opportunity in shares of BP, Transocean and other affected companies."
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