BP WATCH: BP's US Shares Up Despite Snag In Oil Collection

23rd Jun 2010 19:07

By Donna Kardos Yesalavich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--BP PLC's (BP) U.S. shares held their ground Wednesday despite the oil giant hitting a major snag in its efforts to capture oil spewing from the Macondo well in the Gulf of Mexico. U.S. Coast Guard Adm. Thad Allen said an underwater robot collided with the containment cap, an accident that halted the oil collection efforts of the larger of two storage vessels, the Discoverer Enterprise, which has a capacity to capture 18,000 barrels of crude a day. The pause could last for a few hours or much longer depending on whether ice-like crystals called natural-gas hydrates are found within the cap. "I don't know how relevant that is to the [stock] price overall," said Jim Meyer, chief investment officer of Tower Bridge Advisors. "The market's saying the snag with the ship is something that doesn't change the scope of the problem very much. What matters at this point is getting the well capped. Things that happen along the way don't make that big a difference from an economic view to the stock." BP's U.S. shares were up 1.2% in recent trading to $30.03, and option volume was lighter than in recent days, with nearly the same amount of volume in calls and puts, as investors appeared unfazed by the glitch in BP's containment efforts and moved to collect the stock at nearly half its price before the April 20 explosion of the Deepwater Horizon rig. Nevertheless, worries over the company's ultimate liabilities continue to weigh, underscored by a rise in the cost of insuring BP's debt Wednesday as well as a 0.2% slip in the company's London shares. Meyer said the small gain in BP's US shares comes as investors appear are getting increasingly confident that BP has the resources to ultimately meet the claims. "But that's pure speculation on everybody's part," he added. "There's just too many unknowns to make an intelligent decision. We simply don't have a way to judge what this thing is worth." Meyer said there had been some of Tower Bridge's clients had come to the firm with BP shares in their portfolios, and after the oil spill, "we sold most of what we had the discretion to sell." Still, ING told clients in a note dated Tuesday that it believes BP's shares still offer "very good deep value." The firm said BP's liabilities for the oil spill are "likely to be digestible for BP, in our view, particularly given its pro-active efforts to provide cash offsets through lower capex, increased divestments and the suspension of dividends." ING maintained its buy rating on the stock, citing "a still sound profitability and attractive medium-term yield." -By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; [email protected] (Susan Daker contributed to this article.) (END) Dow Jones Newswires June 23, 2010 14:07 ET (18:07 GMT)