Spill Fund Sees BP Dividends Crash – Assets on Sale
British Petroleum has had to put on hold paying any dividends to shareholders valued at more than $10 billion and begun an assets sale sell off in oil and gas fields it has an interest in to assist in stabilising the company. BP has been haemorrhaging money at an alarming rate since the oil spill began, causing credit investors to deem it a rising default risk in as little as five years.
BP have agreed to meet President Obama’s demands for a $20 billion oil spill fund to help the growing victims and clean up the environment in the worst environmental disaster in U.S. history.
The fund would be set-up immediately and funded over four years to assist an independent body to oversee and settle claims. This was agreed to yesterday in the White house by BP’s Chairman Carl-Henric Svanberg who personally met the president’s demands.
The trickling of payments to the spill fund over the term of four years does help to increase the confidence in the company’s ability to pay. Mr Weiss a senior energy analyst with Argus Research in New York stated “It reduces the bankruptcy risk a little bit.”
Financial analysts have mixed feelings on how British Petroleum will fare between its asset sell-offs of income producing ventures, compounded with higher drilling costs through newly created safety requirements impacting on production growth. And all the while meeting agreed requirements to the U.S. oil spill fund.
The blown-out well itself in the Gulf of Mexico was not expected to begin any form of oil production that could begin to help with the bottom line, until approximately 2015. Not very promising for a company that has had $74 billion wiped off its shares since this calamity began and is in definite need of ongoing production growth or capital infusions to keep operating.
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