BP WATCH: BP's Shares Slip On Delay Of Key Test For Well

14th Jul 2010 20:16

By Donna Kardos Yesalavich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--BP PLC's (BP, BP.LN) shares fell Wednesday after the company delayed a test that would indicate whether a sealing cap can completely shut the flow from its leaking oil well in the Gulf of Mexico. BP's American depositary shares slipped 2.1% to $36.12 in recent trading, its second-straight day in the red as the stock continues to cool off from a five-day winning streak. The gains had come on deal speculation and hopes for the well to be capped sooner than BP's August target. Even after its declines Wednesday and Tuesday, the stock is up 6% for the week, thanks to an 8% surge on Monday. It is also still up 35% from its 14-year low hit last month, although the stock is down 40% from where it was trading before the Deepwater Horizon rig exploded. BP's London shares also fell, closing 2.3% lower, and sentiment in other markets toward BP was similarly bearish. The cost to insure BP's debt rose to $355,000 annually to cover $10 million of bonds for five years, up from $321,000 as of Tuesday's close. In the options market, investors picked up more bearish or protective BP contracts than bullish ones. The slump came as a BP executive said during a teleconference that the well-integrity test that had been scheduled for Tuesday has been delayed because officials believe further analysis needs to be done. Investors had been hopeful that a new cap could quickly stop the flow of oil from the well, which could be gushing up to 35,000 to 60,000 barrels a day. BP also said it has stopped drilling on a relief well, setting back its completion by "a couple of days," according to Kent Wells, a senior vice president at BP. The well is viewed as the best possible way to stop the flow of oil from the leaking Macondo well. Still, analysts continue to flag the large risks associated with it. Analysts at Arbuthnot Securities reiterated their sell recommendation on BP: "Given the high level of uncertainty in so many important factors affecting the company, combined with the well situation still not being resolved, we still feel that this recommendation is logical." The analysts said that, "whilst BP is correct to say the relief wells are a proven method to cap wells, it has never been done at such an extreme water depth and this introduces a greater level of uncertainty as to how successful their operations will be in our view." Meanwhile, BP is in no great rush to complete the sale of $10 billion of assets to raise cash for Gulf of Mexico oil spill costs, and it is unlikely to announce any deal within the next few weeks, according to people familiar with the sale process. -By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; [email protected] (James Herron contributed to this article.) (END) Dow Jones Newswires July 14, 2010 15:16 ET (19:16 GMT)