Image by Stephen Messenger
Evidently, being responsible for the biggest environmental disaster in US history doesn't come cheap. Over the last 6 weeks, BP has lost a staggering $67 billion in market value -- one third of the entire company's value. The spill has also cost the company an additional $1 billion in cleanup costs so far. In fact, BP's financial outlook is so dire that some analysts say the company could fall victim to a hostile takeover.After yet another attempt to cap the leak has failed, the oil giant's stock suffered another major hit -- shares fell by another 17% today. And that leaves what was once Britain's biggest company scrambling to protect its debt from defaulting and a potential victim to hostile takeover.
"Given the collapse in the share price and the potential for it to fall further we expect that it (BP) could become a takeover target - particularly if its operating position in the U.S. becomes untenable," said Dougie Youngson, analyst at Arbuthnot Securities.I'm guessing "untenable" means some of the following: the oil continues gushing until August (now a sad but probably scenario), BP gets hit with criminal charges, and its reputation gets permanently damaged (enabling the biggest oil spill in the US will do that, I suppose).
However, analysts believe that "reputational damage and the unknown financial cost of the spill would deter suitors for the moment." Indeed -- vulnerable as BP may be financially, I can't imagine too many buyers lining up to take the reins. But a highly touted change of leadership, or a complete overhaul could perhaps overcome the BP stigma.
The takeaway I'd like to note from all this is that if BP falls, it would be among the strongest messages ever sent to the oil industry: That adhering to safety regulations and producing competent back-up containment plans look pretty integral to the bottom line now, don't you think? Or even -- gasp -- that alternative energy sources may soon be a more sound investment than deep water drilling.