Jamesb101.com

commentary on Politics and a little bit of everything else

BP is a Strong stock buy in some places…….The Company WILL survive…..It has to…..

The number crunchers have figured out what the Dog indistinctly has known since the beginning of this thing…

In the end…

A couple of years from now….

BP

Is going to be fine….

And people are going make money on the stock when it comes back…..and it will…

I mean that….

By early summer the oil leak will be capped…

Money will be dispersed…

Some BP people may have serious legal problems….

But the company WILL survive this…

As bad as things are for the American Gulf coast states……

The Brits are not gonna stand by while their American cousins wipe out their equity in their premier oil company…A lot of Brits have their life savings in that stock….

The new government will not stand for the economic shock of the company going out of business giving all its money to the American’s in the South….

The Gulf of Mexico will survive this…

The people of the Gulf states will suffer a LOT…….

But…..Oil companies will still be taking oil out of the ground in the Gulf of Mexico

Mark the Dogs words…

I’m right on this…..


J.P. Morgan Chase analyst Fred Lucas is going where few analysts dare to go.

In a research note this morning, following a 16% drop in BP’s share price on Wednesday, Lucas declares “Latest technical rout reveals unprecedented value” in the oil giant’s battered shares.

Lucas has a “buy” rating on BP and presents a back-of-the-envelope case for why the company’s $84 billion loss in market value is overblown by a factor of more than 2X. That’s right–Lucas is arguing that BP shares have sold off twice as much as they should have since the spill.

Here are some of Lucas’s calculations, which he admits are based on rough estimates.

Clean up costs: A total of $5 billion, based on a rate of spending $60 million a day. This is about double the $28 million BP has said it has spent daily in the past 51 days. But it also assumes that the clean up will take about 120 days, which seems rosy given that it took several years to clean up the oil spilled from the Exxon Valdez in 1989. Only a few years ago, scientists were still finding oil from the spill along the Alaskan coast.

Federal Fines: While it’s difficult to know for sure the exact amount of oil leaking into the Gulf, Lucas assumes a worse-case scenario of about 1.9 million barrels in total. He also assumes that BP can cap the leak by July 4th. This implies a fine of $2.1 billion based on the Clean Water Act penalties of $1,100 a barrel. If BP is found to be grossly negligent, the fine could rise to $8.1 billion, at a per-barrel penalty of $4,300. This also doesn’t take into consideration fines from the many Gulf states affected by the spill.

Litigation Costs: Lawsuits will likely come from the tourism and fishing industries. According to Lucas, total annual revenue from tourism from the affected states is Alabama ($3 billion) Louisiana ($9 billion) Mississippi ($2 billion) and Florida ($57 billion). Fishery revenue from the affected states is Alabama ($1 billion) Louisiana ($3 billion) Mississippi ($0 billion) and Florida ($5 billion). Lucas says if these industries lose half that revenue in 2010 and 2011, then the total cost to BP would be $16 billion.

All told, his estimated cost is $29 billion

Loss in market value since the spill is $84 billion.


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June 11, 2010 - Posted by | Blogs, Breaking News, Counterpoints, Ecology, Government, Health, Law, Media, PoliticalDog Calls, Politics, Projections, The Economy, Updates | , , , , , , ,

11 Comments »

  1. WE here would like to know

    how Halliburton COMPANY stock is going to come out in the end as well as the other company that GOT SET UP by Obama’s henchman

    Comment by Timothy Leal | June 11, 2010 | Reply

  2. You are WAY too sanguine about this james

    This is going to have a MAJOR effect on offshore drilling for years to come

    No

    Everything is not going to be “fine”

    In my view theres a btetter than 50% chance that before this is over

    BP will file bankruptcy

    As for oil drilling continuing

    Sure it will

    But thats not the issue

    Will there be MAJOR MAJOR changes?

    Yes

    Your simple view that the well will be capped and everything will return to normal is naive in the extreme

    Comment by My Name Is jack | June 11, 2010 | Reply

  3. Okay….we’re ON!

    He, he, he…..

    Comment by jamesb101 | June 11, 2010 | Reply

  4. If you check the post…..There is already bean counters working the money scenario’s out….

    There IS a finite amount of money BP will only end up paying….

    Several Billions I would expect…

    BP has money to cover that right now….
    What is each ship catching the oil now worth?

    The 40,000 barrel figure was the leak BEFORE the cap was put on….
    Common sense would make me think the flow out in the gulf is down to 5,000 or so barrels a day…..

    I have tries VERY hard to get away from the media hysteria….

    Second major point…..
    There is absolutly no way the British government is gonna let BP walk away from this in Backrupacy….
    There are thousands of people in the UK whose pensions are in the BP stock….

    Not gonna happen…..

    Last point…..
    In reality…
    There isn’t much Obama …or Congress can do to BP…legally….

    THEY ARE PRIVATE COMPANY….

    Least you forget……
    I hate to go there but American Airlines is still flying after 9/11…

    You heard it here…
    If the damage gets tooo big…..

    The Insurance companies, BP , the British and yes the US will pitch in to pay for the ultimate damage…..

    Comment by jamesb101 | June 11, 2010 | Reply

  5. “Common sense”

    GET REAL

    Its flowing at way more that

    Indeed there is no hard evidence that BP has done much of anything

    I repeat there is a good chance they will end up Bankrupt

    “Bean counters” notwithstanding!

    Comment by My Name Is jack | June 11, 2010 | Reply

  6. except for the pictures of the cap…

    the oil recovered…..

    the workers doing their thing at the beaches…

    that all….

    Comment by jamesb101 | June 11, 2010 | Reply

  7. Oh Wow!

    They have pictures!

    Well

    Gee Whiz

    This has been a boondoggle from Day One

    BY YOUR OWN ADMISSION

    NO ONE knows how much oil is flowing or how much of the total is being recovered

    And lets not forget the guys cleaning up the residue on the beach(like that has a damn thing to do with the unseen environmental damage)

    Holder ought to indict EVERY executive of BP

    Who gives damn if it sticks?

    Make that piece of crud who is their CEO long for his “normal” life

    Your “defense” of poor ol BP is Manilaesque however

    Comment by My Name Is jack | June 11, 2010 | Reply

  8. C’mon Jack. Why are you picking on the poor execs over at BP. Don’t you know this is all the environmentalists fault? If only they let the oil companies drill right on the shore they wouldn’t be drilling out in the deep sea. Meanies!

    Comment by Scott P | June 11, 2010 | Reply

  9. Ok…Let me get straight on this…

    I don’t feel sorry for BP…

    When they sign up…They get what comes…..

    I am pointing out the ‘other side’ of this for BP….

    If you notice I acknowledge that the spill and its effects ARE Horrible…
    There is not denying that…

    I also point out that BP will be shelling out in the BILLIONS!

    But I also acknowledge that this was probably a accident…
    To say that BP would put itself thru this on purpose is crazy…..

    Shit happens all the time…

    To you…me…and BP…..

    The company is a mainstay in the British economy….
    And I GUARANTEE you that the British government will NOT standby anda let the company go down…..

    Obama knows this and will be tempered in his approach…..

    The fines and lawsuits will be woopers……

    But BP will still be drill 5 years from now……

    You do notice the stock recovered somewhat today…..

    Comment by jamesb101 | June 11, 2010 | Reply

  10. So what?

    It could tank Monday

    Your approach above is a FAR cry from your posts the last few days

    Wherein you seem almost giddy in telling everyone about poor ol BP

    Obama has disappointed me in many ways

    But his handling of this has been especially bad

    He should be lambasting these bastards daily

    As for the “shit happens” routine

    Anyone can say that about anything

    So why even discuss anything

    I mean

    “Shit happens”

    Cmon

    Thats Leal type blather!

    Comment by My Name Is jack | June 11, 2010 | Reply

  11. He, he, he….

    Jack….I am smiling now….

    Our back and forth brings back good memories from P1…

    I haven’t had that in a long while!…..

    Obama doesn’t lambast anyone!…

    We both know that!

    Comment by jamesb101 | June 11, 2010 | Reply


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