For BP, Toll Likely to Extend Past Cleanup
By JAD MOUAWAD and CLIFFORD KRAUSS
On the face of it, BP can easily afford to pay the short-term costs of the oil well that is leaking millions of gallons into the Gulf of Mexico. Last year, the company earned $17 billion, and it ended the year with more than $8 billion in cash.
But concerns about BP’s ability to meet all its obligations over the long haul — or even survive the crisis intact — are rattling the government, Gulf Coast residents and investors.
The ultimate cost of the disaster remains uncertain. Wall Street estimates have put the bill for BP at anywhere from $17 billion to $60 billion, including penalties, damages and cleanup costs for the Deepwater Horizon disaster.
Beyond the financial costs, the multinational oil giant is facing a growing number of risks that could jeopardize its future. The company is almost certain to face tougher scrutiny from regulators. Opportunities to drill wells may be limited as governments and partners shy away from the company’s tarnished reputation. . .
Concerns about the company’s ability to balance the competing demands on its cash have prompted investors to dump the stock. On Monday, BP shares fell almost 10 percent in New York trading, contributing to the stock’s nearly 50 percent plunge since the April 20 accident.
“The costs are going to be significant, yes, and potentially they are an existential threat to BP,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.
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