BP stocks dropped a further four percent on Monday when a US lawmaker released an internal company document that showed worst-case estimates of the Gulf of Mexico spill at 100,000 barrels per day, nearly twice that of government figures.
REUTERS - BP shares fell on Monday after a U.S. lawmaker released an internal company document over the weekend pegging the worst-case scenario rate for the Gulf of Mexico oil spill far higher than government figures.
The oil giant's stock, which has nearly halved in value since an explosion on an offshore rig on April 20, slid over 4.0 percent after the document estimated the rate at 100,000 barrels per day (15.9 million litres) versus the government estimate of 60,000 barrels.
BP spokesman Toby Odone said the document appeared to be genuine but the estimate applied only to a situation in which a key piece of equipment called a blowout preventer is removed.
"Since there are no plans to remove the blowout preventer, the number is irrelevant," Odone said.
BP also said in a statement on Monday, the 63rd day of the spill, that the cost of its response had hit $2 billion and it had paid out $105 million in damages to those affected.
It rejected claims by its partner in the oil well, Anadarko Petroleum, that it had been negligent in the way it operated the installation..
"It's a combination of things (affecting the share price)," said Barclays Capital analyst Lucy Haskins.
"Over the weekend we were getting the newsflow about Anadarko refusing to pay and then there's these stories about higher flow rates in an internal memo.
"The shares are very vulnerable to any movement in terms of newsflow," she added.
The estimate in the undated BP document was released by U.S. Representative Ed Markey, chairman of the energy and environment subcommittee of the House of Representatives Energy and Commerce Committee.
"Right from the beginning, BP was either lying or grossly incompetent," Markey told NBC's "Meet the Press" on Sunday.
The document was posted on the Internet at http://globalwarming.house.gov/files/WEB/flowrateBP.pdf
There was no sign that BP's problems were going away.
The BBC's Panorama programme said that a worker on the Deepwater Horizon rig where the explosion took place, had told it that he identified a leak in safety equipment weeks before the explosion. A congressional committee probing the accident said last month the blowout preventer had a leak in its hydraulic system.
And BP CEO Tony Hayward, the target of U.S. criticism for his statements since the spill began, sparked new controversy by watching a yacht race off the English coast on Saturday. He is also expected to attend the BP Portrait Awards on Tuesday.
Bond, bigger asset sales?
The British group is planning to raise $50 billion to cover the cost of the largest oil spill in U.S. history, London's Sunday Times reported.
The newspaper, without citing sources, said BP planned to raise $10 billion from a bond sale, $20 billion from banks and $20 billion from asset sales over the next two years to cover the cost of the spill.
The Financial Times said that CEO Hayward was planning to travel to Russia to reassure President Dmitry Medvedev that the oil group is not on the brink of collapse. BP said it did not comment on the movements of its chief executive.
BP said last week it would suspend dividend payments to its shareholders and increase the pace of asset sales to $10 billion this year to offset liabilities from the spill, which began after an explosion that killed 11 workers.
The amount of oil spewing from the well has been a matter of considerable controversy in the two months since the spill erupted, with critics saying BP has understated the flow rate.
The spill has dealt a body blow to fishing and tourism industries across four Gulf states, soiling coastlines that are a playground for tourists and a key habitat for wildlife.
New Orleans Mayor Mitch Landrieu is taking mayors from 17 U.S. cities to visit the slick-damaged Mississippi Delta, where oil has coated fragile marshlands, tarred wildlife and decimated fisheries.
Huge amounts of oil continue to leak into the sea from the ruptured well a mile (1.6 km) below the ocean surface despite BP containment systems.
BP said on Sunday that 21,040 barrels of oil (883,680 gallons/3.34 million liters) leaking from the well was collected by its siphoning systems on Saturday. One of the two systems was restarted on Saturday after a 10-hour shutdown to fix a problem with fire-prevention equipment, BP said.
Kenneth Feinberg, the independent administrator runing the $20 billion fund set up by BP to compensate victims, said on Sunday he would make sure that "every eligible, legitimate claim is paid and paid quickly."
Feinberg, an arbitration lawyer, dispensed hundreds of millions of dollars to victims of the Sept. 11, 2001 attacks on the United States.
The spill threatens the coastal economies of four states including hard-hit Louisiana.
Mississippi Republican governor Haley Barbour, appearing on "Meet the Press," said he was anxious to see the well capped, the spill cleaned up and BP cover the entire tab.
"Nothing is satisfactory until the well is shut in. When the well is capped, then clean up the oil, and then BP pays the bills. Until all of that is done, nothing is satisfactory," he said said.
Despite assurances of swift compensation, Louisiana Gulf residents remained sceptical.
"Every time they say there's a fund for fishermen, we wait years and years," said Tal Plork, whose fisherman husband, Phan, faced long waits for aid after two hurricanes rampaged across the Gulf region in 2008. "It was like that for Gustav and Ike. Hopefully, now they will go faster."
Date created : 2010-06-21