BP now stands for Bad Publicity

Posted by Investing Freak on June 14, 2010

After creating one of the biggest disasters in US history with the Gulf Oil Spill, British Petroleum (BP) has tried to buy ads on Google to get their message through, however, they have not just stopped at buying ads for Google search and have been promoting their message on YouTube too.

BP plc (ADR) has concluded that its “top-kill” attempt to seal its broken well in the Gulf of Mexico may have failed due to a malfunctioning disk inside the well about 1,000 feet below the ocean floor. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well. The real doomsday scenario here… is if that casing gives up, and it does come through the other strings of pipe. Remember, it is concentric pipe that holds this well together. If it comes into the formation, basically, you‘ve got uncontrolled [oil] flow to the sea floor. And that is the doomsday scenario. –Naked Capitalism

The U.S. Coast Guard gave BP Plc 48 hours to find more capacity to contain its leaking oil well in the Gulf of Mexico after scientists and researchers doubled their estimates of the spill’s size.Based on government estimates, the drillship isn’t capturing as much of the spill as BP predicted earlier this month. In a June 4 interview with CBS, Suttles said the system would be capable of capturing as much as 90 percent of the flow.

If BP does not comply with this order, and cannot give a satisfactory reason why, this will put them further on the back foot in their meeting with Obama next week. Readers are correctly cynical as to whether the Administration will live up to its tough words, but the groundwork is being laid, which would make failure to follow through even harder to defend.

Separately, BP said its board will meet June 14 to discuss whether to cut or defer its second-quarter dividend payment following the spill. This is causing BP’s Major British Shareholders to Ditch The Company While American Ones Are Staying. Major UK institutions including Legal & General, M&G, Scottish Widows, Threadneedle and Axa have all trimmed their holdings since the Deepwater Horizon rig sank. US pension funds – including Calpers, the Teacher Retirement System of Texas and Ohio Public Employees Retirement System – have held their stakes in the company despite the dramatic fall in the share price.

If you think BP is a good buy right now check out this article: The Ultimate Contrarian Bet: BP

Lets see what today has in store for BP and the rest of the market.

Happy Trading

Update 1pm : – Senate Majority Leader Harry Reid (D, Nev.) and members of the Democratic caucus on Monday asked BP Plc (BP) to set aside $20 billion in a special account to be used to pay for economic damages and clean-up costs of an ongoing oil spill in the Gulf Coast.

Update 3:30pm: To demonstrate that it’s responsibly taking care of the oil spill and listening to public complaints, BP has touted the fact that it has set up call centers to handle the response. However, one of the operators at the BP Call Center in West Houston has revealed that she and the other 100 employees are just PR props; BP isn’t actually doing anything with the thousands of calls it receives: ““We’re a diversion to stop them from really getting to the corporate office, to the big people,” said Janice. … Because the operators believe the calls never get past them, some don’t even bother taking notes.”

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46 Comments to BP now stands for Bad Publicity

  • BP’s stock fate will depend upon the decision Congress makes about the cap on compensation Big Oil has to spend to pay for damages. If it is unchanged, BP’s stock will most likely go up; it has already been cut in half. If the cap is raised, the stock will most likely drop more before it will be a good buy.

  • Well if congress doesn’t raise the cap you can bet Americans will revolt. We aint footing another bill to bail out another money hungry industry.

    My ultimate doomsday is BP gets nationalized (but perhaps highly unlikely)

  • The oil companies make so much profit (second to insurance companies) it’s pathetic. A billion is a drop in the old oil bucket. They’ll end up contributing heavily to our economy, lost profits and otherwise, that it will be the stimulus needed to boost our economy. Ultimately, however, gas prices will rise and the American public will pick up the tab anyway.

  • a billion? well lets aim for at least 10-15 billion but still if they cut dividend and all they’ll still have at least 50 billion in market cap.

  • Here’s hoping phil drags his whipped ass back next week.

    stringm says:
    June 11, 2010 at 7:33 pm


    what is strings problem???…tell him he can see my ” whipped ass” at Ks blog

  • Ha! I don’t know what he meant by that Phil. I think he was teasing to get you back. You’re missed.

  • GEORGE and K

    plan to sell schx @ 1103 area …ie gap closure and await further developments…

    STRING…….my whipped ass is buying 10 year notes as they get cheaper…hoping for more stock rally to get more bonds even cheaper…..or IEF the 7-10 yr etf

  • haha phil!
    btw is the site loading fast enough for you guys? I want to make it faster but need some time to troubleshoot.

    Been too busy watching world cup but 1103 seems right area to sell but not go short.

  • Phil,

    Okay… Hehe, it said my previous comment was too short – I said, “P, ok”

  • George,
    I merely provided my blog for phil to post if he wanted 🙂
    There’s more comments over there so there’s more discussion and challenge for phil haha.

    I am not opposed to anyone not posting over there, for the moment you’ll still find me here.

  • He was censored for that day and I was too. but not permanently usually thing resets within 24hrs.

    1088 could be support next if there is a down move.

  • Looks like my 10-15 billion wasnt too far off.
    I have updated the blog on top. senate wants BP to set away $20 billion minimum.

    here comes volatility

  • Now that Moody’s has downgraded Greece’s bonds to junk, the dominoes begin to fall.

  • K
    June 14th, 2010 – 12:32
    1088 could be support next if there is a down move.
    as you know i always watch /ES because it has more price action so 1088 on the spot is the current low! Jackopt once again

  • as for SPX a move to 1076 cant be thrown out in next few days. I just cant trade options as tomorrow will be a down day in InvestingFreakville.

    SPX did nearly close today’s gap up just FYI

  • yep so far holding like a charm. 1088 S&P futures
    hope you got in. i’m still 100% cash

  • no new high on TED spread yet intraday so this might be support at least for now at /ES 1084.60

  • 1090 close didnt happen.
    futures hit 1084.25 (just below 1084.60) but closed above it on the 15 minute time frame.

    where do we go tomorrow? I will be mostly inactive for the day on Tuesday but make money all of you please 🙂
    100% cash.

  • BP – bad situation getting worse. The Coast Guard giving ultimatums to BP knowing full well (no pun there) that BP can’t do anymore than they are or have done. Still can’t get blood from a turnip and all that…

  • This oil spill is going to be a boom to the economy. Billions to be spent by Federal, State, and local governments, then BP will toss a few billion here and there. The fishing industry ARE the boats being used to control the oil slick; we’re looking at 10 years or more for cleanup.

    Then, Obama gets on TV and says no expense will be spared (more or less) to rebuild the Gulf. He also says alternative energy will be pushed forward, kicking and screaming, which will, IMHO, create the next BIG THING that will boost the economy like a Saturn rocket. So, that is this generations economic booster – clean energy and less reliance on fossil fuel.

    When that kicks in is another post.

  • I’m baaaak. haha for a while (until next trading week and then market will need to survive on its own)
    Don’t expect a new post until i get caught up. continue discussions here 🙂


    cleanup jobs in the gulf will probably pay more than people could earn at their regular jobs if omama dictates the compensation….bp is paying for it…not him…..its the perfect govmint solution to joblessness….dig hole in beach and remove oil……get paid……fill hole……get paid again….rinse and repeat….

  • yup good call on that spike, i bot a 29 put for .33, then wrote a 27.5 put for .35 after it came back to reality, net credit baby haha 2 dollas! also miraculously covered at 30.5 and 29.7, everything except for my puts

    those parabolics are nice to short or put, especially writing a vertical for net credit, booyakasha, rispek

  • also got a 25 oct put from a week ago! wrote a 22.5 for what i paid on the long put! awesome, break even no matter what BP wants to do… just gotta have the patience to leave it alone. and PS i beat my last record, using BP again on those shorts. not by much but i beat it