BP plc (ADR) (BP), Deepwater Horizon and Accountability, Should You Fret? Halliburton Company (HAL), Transocean LTD (RIG)

Page 1 of 2

Among all the other silly stuff going on these days – the Oscars, the Sequester and so forth – is the fact that the Federal Government’s case against BP plc (ADR) (NYSE:BP) is finally moving forward. It’s been about three years since the gulf oil spill that cost 11 people their lives and did a god-awful amount of damage to natural resources along the gulf.

BP To Pay Massive Fine, More To ComeThe real issue here for investors is money, of course. That and how the case will portray BP and other firms involved in drilling for oil in the Gulf of Mexico and elsewhere. The issue of offshore drilling has been touchy for decades, of course, with people on both sides making (sometimes) good arguments for and against. On the one hand, we want the energy resources. On the other hand, we want clean beaches and safe wildlife. It’s not a problem that admits obvious, tractable solutions.

So among all this, BP plc (ADR) (NYSE:BP) is trying to hammer out a settlement with the government. At trial the firm is potentially exposed to anywhere between $4 billion and $20 billion worth of damages. Also, if found in violation of the Clean Water Act there could be other, more difficult, regulatory penalties that slow the ability of BP to expand its drilling presence. If I’m sure of anything, it’s that the company and investors don’t want that to happen.

BP

BP, even though it was in bed with some other large firms in the Deepwater Horizon, is at the center of the issue. The company has tried to argue that both Halliburton Company (NYSE:HAL) and Transocean LTD (NYSE:RIG) should be involved in the settlement. However, for investors that isn’t going to play. The markets largely react to media coverage, and that means that BP is holding the bag.

There have been some real issues, share-wise, at BP over the last few years. Before the spill, BP was trading about $60 per share. Since then, it’s hovered around $40 per share. Holders back then took a real hit and haven’t recovered. The stock’s dividend also went from 84 cents per share to 42 cents pretty quickly. It’s recovered now to 54 cents, an astonishing 4.88% yield, but still, that’s an unhappy set of events. I think the best thing for BP would be to get past all this and try to rebuild itself. Uncertainty is going to keep the market away from it.

Halliburton Company (NYSE:HAL)

Halliburton is a part of the disaster in the gulf due to the fact that it did some of the work on the rig. Since then BP has done it’s fair share of finger-pointing at Halliburton for doing what BP calls substandard work on the cement portion that blew. Still, I don’t see a lot of the blame or market effect hitting Halliburton. The firm is one of the top oil field contractors in the world, and increased demand for oil is only going to further expand the company’s work.

Share-wise there was a small trough in Halliburton’s stock during the initial media frenzy about the gulf oil spill. However, that drop had been more than recovered by the end of 2010. These days Halliburton looks pretty good as shares have grown from $26.70 to $41.11 since last June. The firm also increased it’s dividend for the first time in many year’s just recently. A 1.22% yield isn’t great but the increase shows an increasing confidence that it’s going to be having good times in the near future.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!