BP says it can stay afloat without new cash for oil spill

6th July 2010, Comments 0 comments

BP insisted on Tuesday that it can cope with soaring oil spill costs without asking shareholders for cash, amid reports that Britain is working on a crisis plan if the company is sunk by the disaster.

But BP also flashed a signal that it would welcome new shareholders, and also appealed to existing stock holders to stay on board.

This pushed up shares in the stricken giant.

"Oil company BP is ... still gaining after the weekend news concerning the possibility of a strategic investor coming on board," said IG Index analyst David Jones.

"Today's report that BP won't be issuing any more shares has calmed any nerves that its value would be diluted."

A company spokeswoman told AFP that "we are not issuing any new equity," denying weekend reports that BP was planning to sell new stock to a strategic investor.

"We welcome new shareholders to come onto the shareholder register and we welcome existing shareholders who want to take a bigger amount of shares."

In reaction, BP's shares jumped 2.39 percent to 341.25 pence in late morning London trading. The FTSE 100 index of leading companies, on which it is listed, rallied 2.08 percent to 4,923.63 points.

BP's share price has collapsed by more than 50 percent since the Deepwater Horizon oil rig it leased sank on April 22, two days after a blast that killed 11 workers.

The British government is meanwhile working on crisis action in case the company is ruined by the costs of coping with the oil spill, The Times reported on Tuesday without citing its sources.

The talks, with officials from the British government's Department for Business and the Treasury, show mounting concern that the company could collapse, the report said.

"It is not clear how bad this will get, but the government needs to be prepared for any eventuality," said a person familiar with the talks cited by The Times.

The daily paper added that British Prime Minister David Cameron and Energy Secretary Chris Huhne would discuss BP's future with US government officials in a trip to Washington later this month on July 20.

An insider also told the newspaper that the question had been raised as to whether, under extreme circumstances, the government should intervene to save BP with a taxpayer bailout.

The Prime Minister's official spokesman declined to comment on The Times report.

"Our position on contingency plans with respect to individual companies is if they are happening we would never comment on them," the spokesman said.

On Monday, BP revealed that its costs over the Gulf of Mexico oil spill have soared above three billion dollars for the first time.

The company has now spent about 3.12 billion dollars on the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid and federal costs.

The latest estimate was far higher than the 2.65 billion dollars given by the energy firm on Monday of the previous week.

BP had agreed last month to create a 20-billion-dollar fund for costs arising from the spill and is selling non-core assets to raise 10 billion dollars.

Chief Executive Tony Hayward, meanwhile, was visiting ex-Soviet Azerbaijan Tuesday as the company seeks to offload assets.

"The chief executive of BP has arrived in Azerbaijan. The aim of the visit is to discuss ongoing projects," BP Azerbaijan spokeswoman Tamam Bayatly told AFP. She said further details of the visit would be released later.


© 2010 AFP

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