Oil spill news miscellany. BP's solvency is still the topic

I am very short on time today and I have right around $20 billion dollars worth of links to share so instead of making a formal post I’ll make like our good friend Editilla who also gets a blanket hat tip and simply aggregate the BP finance news for the Slabbed Nation. Hopefully Nowdy will be around a bit later with the latest on the Ex Rel Rigsby. Without further adieu here is the latest:

Becky Mowbray at the Times Picayune wrote a good article on the specter of a BP bankruptcy which included comments from two local bankruptcy lawyers in Joe Friend at Breazeale, Sachse & Wilson and Rudy Cerone at McGlinchey Stafford who both were willing to go out on a limb making quasi-predictions about what the future holds. The story is a bit more sanguine regarding BPs future prospects than most I’ve seen.

James Gill’s column in today’s Times Picayune nails the dichotomy of why everyone hates BP while also needing the company to stay solvent and engaged.

Harry Shearer wrote a very good piece for the Huff Po that nails the hard reality why no one should feel sorry for BP longs.  I personally do not like to see people lose money in the markets but how much of BP’s profits came from cutting corners on safety through time? The piece serves as a reminder why I caution most retail investors against owning individual issues, especially those using brokers or so called money managers.

One knucklehead wanting to save 10 hours may well be the cause of this disaster. It appears the same knucklehead also has a slight problem telling the truth.

Fitch gave BP’s credit rating a big time haircut yesterday. The Wall Street Journal reports that pricing on BP credit default swaps soared today to 695 basis point sand yields on one of their short term bonds rose to over 9%. Action on BP put options also was very brisk. None of these items bode well for the future direction of BP stock.

The announcement of the $20 billion escrow account was accompanied by news that the heretofore sacrosanct BP dividend has been eliminated for the rest of this year. The news actually helped stabilize pricing in BPs ADRs as investors gained a bit of comfort on the ultimate price tag. The again no one can say with any sort of certainty how much the ultimate price tag will be for the disaster.

James Stewart at the Wall Street Journal gives some friendly advice to those still holding BP stock: Sell the first time any sort of good news causes the pricing to spike upward in a twist on the old Wall Street adage Buy the rumor, sell the news.

Our boy Alan Kanner was selected by Louisiana AG Buddy Caldwell to lead the state’s litigation team against BP. This of course has set off old tensions between the plaintiff’s bar and the corporate shoeshine boys at the Louisiana Association of Business and Industry. It appears the gang at the legislature has found there are benefits to allowing the legal team to work on contingency but if the state is willing I’m certain Mr Show Me the Money will gladly work for the $500 plus an hour good corporate lawyers fetch.

Speaking of corporate lawyers, BP’s legal team is taking shape and it looks like several large firms from Florida will be handling the heavy lifting for team BP.

More later as time permits.


3 thoughts on “Oil spill news miscellany. BP's solvency is still the topic”

  1. OU! You bit off a lot, SOP. Before today I was predicting a bankruptcy filing, but now I just don’t know. However, I will make Two Comments (sometimes “wrong” but never in doubt): (1) I don’t know what happened at the White House today, or how long the negotiations had been underway before today. I DO know, however that the Taxpaying American Public have NOT been told everything. Usually, in such matters one asks, in “knee-jerk” fashion, “What did the President ‘give away’?” Does anyone know? Does anyone care to speculate? What “wiggle-room” does whatever deal struck give BP? (2) David Hammer of TTP has been writing some very good articles about “What happened?” Put the following names on your “hit lists”: Donald Vidrine, Robert Kaluza, Mark Hafle and John Guide, all BP engineering employees. There are “more” implicated, but focus on these four (4) for now. (3) Also focus on the contents of a Federal criminal statute, 18 U.S.C. 1001, which criminalizes LYING to investigators in connection with a Federal investigation. Ashton O’Dwyer.

  2. From the last link in the post, one of my all-time favorites from a lawyer who clearly will represent anyone who pays him:

    Richard said he has no conscience pangs for taking the case — just as he had none when he represented George W. Bush in the 2000 presidential recount, even though he’s a Democrat.

    “I don’t think that way,” Richard said. “I represent who hires me. If someone calls me, and the case looks interesting, and I don’t have a conflict, I am interested. The whole legal system wouldn’t work if lawyers thought differently.”

  3. Is this another lesson learned just as Katrina was? Federal Permits are issued for drilling just as they are for any project that includes Federal Lands, water bottoms or construction of a local flood control project.

    Is anyone looking into the MMS participation in the lack of enforcement of existing guides, regulations, safety manuals, operation procedures, maintenance issues, and following sound engineering practices?

    You may blame the one taking the oil, but the one leasing these lands for them to take the oil are the pigs that are first to the trough and somehow got into bed with the leasse!!!

    Is the $5,000 gift that got the head of that organization the only thing that changed hands?
    Government coruption seems to grow as the payoffs grow!!

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