Oil Spill Floats on Water But Sinks BP

Reuters published rather pointed points today related to the Gulf oil spill:

Analysts … cited rising takeover speculation [of BP], although they said reputational damage and the unknown financial cost of the spill would deter suitors for the moment.

BP could now be easy prey having lost over a third of its market value or 46 billion pounds ($67 billion) in six weeks.

“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….

The cost of protecting the company’s debt against default rose sharply, with five-year BP credit default swap widening by 71 basis points to 173 basis points.

The linkage of environmental risk management and financial impacts doesn’t get much clearer – or bigger – than that.

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