BP WATCH: BP's Shares Up Amid Relief Well Optimism

1st Jul 2010 18:09

By Donna Kardos Yesalavich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--BP PLC's (BP) shares rose in the U.S. and London Thursday as investors grew hopeful that the oil giant may complete the relief wells and ultimately cap the oil spill in the Gulf of Mexico ahead of schedule. BP's American depositary shares climbed 4.3% to $30.14, the stock's first time trading over $30 in a week. The shares are now up nearly 13% from the 14-year intraday low hit last Friday. However, the shares are still down 50% from April 20, the day the Deepwater Horizon rig exploded. In London, BP's shares closed 2.8% higher. Meanwhile, the cost to insure against BP defaulting on its debt for five years fell to $510,000 for $10 million of coverage, from $575,000 at Wednesday's close and from $604,000 last week, according to Markit, a data provider. In the options market, there was more volume in calls, which convey the right to buy shares, than in puts, which convey the right to sell the stock. The market moves came as investors have grown increasingly optimistic about BP's efforts to complete two relief wells for the Gulf of Mexico oil spill. Analysts at RBS said they expect the first relief well could be completed in the first half of July." The firm added, "these wells are seen as the primary method of halting the flow of oil and their progress may affect the price of the stock." The unified command responding to the spill has been adamant that the timeline for completing the first relief well remains early August. As the drilling work has closed in on the well, the work has become more complicated and frequent testing is required. The optimism about completing the wells comes despite stormy weather that has been somewhat of a hindrance to BP's efforts to contain and cap the spill. Though the underwater oil-recovery operations weren't in Hurricane Alex's direct path, the storm system is nonetheless churning up waters at the site and disrupting other emergency responses to the oil leak. Investors say the sooner the spill is stopped, the sooner Wall Street will be able to evaluate the company's ultimate liabilities, removing a key uncertainty that has weighed on the shares for months. "It's a highly risky stock right now," said Peter Andersen, a portfolio manager at Congress Asset Management Co. "It's virtually an unanalyzable situation. But if you've got a strong stomach...it could possibly pay off." -By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; [email protected] (END) Dow Jones Newswires July 01, 2010 13:09 ET (17:09 GMT)