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
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations 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!