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Thread: BP Considering Suspension of Dividends

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    Re: BP Considering Suspension of Dividends

    They maintain cash balances of about $9B and have a annual cash flow of approximately $27B. They have taken an incredible goodwill hit, which should adversely impact annual cash flow. This clean-up and related damages could be north of $50B. They don't have "plenty of money to do both".

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by NolaMan View Post
    This comment has no basis in reality. You simply cannot make such a claim without knowing what the potential liabiity for the oil spill will be in terms of dollars.
    Probably a couple of billion, I could be wrong but I think that should cover it.
    On the other hand, how do you know they can't?
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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Kandahar View Post
    As of today, BP's market cap is still $106 billion (and that's WITH the expected costs already factored in to the stock price). That's plenty to cover the expenses arising from the cleanup, and whatever incidental expenses they're legally required to pay. All of this talk about "poor BP, we need to help them profit so they can pay us back" is pure bull****. There is no question about their ability to pay whatever amount they might conceivably be required to pay. Do you people own stock in BP or something?
    Of course there is a question about their ability to pay..... BP is no more the bottomless pit of wealth than Gulf of Mexico is not a vast sea that can absorb anything dumped in it. They have an annual cash flow of $25-30B and $8B in the bank. The big unknown is the financial magnitude of this disaster and to what extent they can tap their partners in crime (Anadarko, Halliburton and TransOcean) to payout on this.

    The market cap is a nice number, but it doesn't pay the bills.

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Harry Guerrilla View Post
    Probably a couple of billion, I could be wrong but I think that should cover it.
    On the other hand, how do you know they can't?
    i have never said they could not handle it, however simply saying "there is plenty of money to go around" shows a complete lack of thought about the scenario we are facing. It is widely accepted at this point that BP will be found grossly negligent, and even criminally negligent, in which case there is no cap on their liability. A "couple billion" will probably cover the actual clean up cost, but that ignores the liability they will face for lost wages of thousands in the Gulf, as well as lawsuits to recover losses from their partners operating the rig, as well as government claims to lost tax revenues... the potential liability could easily go into the tens of billions.

    With roughly 9 billion cash on hand, a tarnished credit rating, and loss of revenues from other sources impacted by the moratorium, there is no assurance that they will simply write a big check and go along their merry way. It is far to premature to assume they will have no problem covering the liability.

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by upsideguy View Post
    Of course there is a question about their ability to pay..... BP is no more the bottomless pit of wealth than Gulf of Mexico is not a vast sea that can absorb anything dumped in it. They have an annual cash flow of $25-30B and $8B in the bank. The big unknown is the financial magnitude of this disaster and to what extent they can tap their partners in crime (Anadarko, Halliburton and TransOcean) to payout on this.

    The market cap is a nice number, but it doesn't pay the bills.
    I posted earlier, Anadarko will most likely have no liability, and can probably get back most of their money by suing BP after BP is found grossly negligent. Halliburton will definitely have no liability, and TransOcean I have not looked into. This will be BP's to cover.

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by NolaMan View Post
    i have never said they could not handle it, however simply saying "there is plenty of money to go around" shows a complete lack of thought about the scenario we are facing. It is widely accepted at this point that BP will be found grossly negligent, and even criminally negligent, in which case there is no cap on their liability. A "couple billion" will probably cover the actual clean up cost, but that ignores the liability they will face for lost wages of thousands in the Gulf, as well as lawsuits to recover losses from their partners operating the rig, as well as government claims to lost tax revenues... the potential liability could easily go into the tens of billions.

    With roughly 9 billion cash on hand, a tarnished credit rating, and loss of revenues from other sources impacted by the moratorium, there is no assurance that they will simply write a big check and go along their merry way. It is far to premature to assume they will have no problem covering the liability.
    If you think they should be found criminally negligent, then they will most likely try to avoid paying anything.
    If I were them, I would do the same thing.

    As it is now, the cost of the clean up so far has been approximately 1.25 billion.
    They are already handling claims on top of that, they shouldn't be required to handle claims made by workers the government suspended.

    That wasn't their fault.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Harry Guerrilla View Post
    If you think they should be found criminally negligent, then they will most likely try to avoid paying anything.
    If I were them, I would do the same thing.
    Try all you might, you cannot avoid paying out at least large sums of money in this scenario. I think they will most likely be found criminally negligent, but at the very minimum they will be found grossly negligent, which eliminates the liability cap as well.

    They could file for bankruptcy I suppose, but in Chapter 11 they would still have to pay out, just restructured. And Chapter 7 they would be liquidated. Neither of those is a good option.

    As it is now, the cost of the clean up so far has been approximately 1.25 billion.
    They are already handling claims on top of that, they shouldn't be required to handle claims made by workers the government suspended.

    That wasn't their fault.
    I agree they should not have to pay workers that the government suspended, but the government apparently seems to think otherwise. Aside from that however, they can (and will) be held liable for lost wages of seafood industires in the Gulf etc that have been basically shut down due to this spill, and that is not going to be cheap.

    But think about even just the clean up, you say it has already cost 1.25 billion, and they have really cleaned up nothing to date.
    Last edited by NolaMan; 06-12-10 at 02:20 AM.

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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by NolaMan View Post
    Try all you might, you cannot avoid paying out at least large sums of money in this scenario. I think they will most likely be found criminally negligent, but at the very minimum they will be found grossly negligent, which eliminates the liability cap as well.

    They could file for bankruptcy I suppose, but in Chapter 11 they would still have to pay out, just restructured. And Chapter 7 they would be liquidated. Neither of those is a good option.

    I agree they should not have to pay workers that the government suspended, but the government apparently seems to think otherwise. Aside from that however, they can (and will) be held liable for lost wages of seafood industires in the Gulf etc that have been basically shut down due to this spill, and that is not going to be cheap.

    But think about even just the clean up, you say it has already cost 1.25 billion, and they have really cleaned up nothing to date.
    For the most part, I want people to stop crying foul and playing the blame game until we can actually get the well under control.
    Until then, it is all the same "big oil" haters take pot shots at their favorite enemy.

    The reaction of the government is very similar to the Toyota floor peddle stick problems, lots of loud mouth, blow hards flying off the handle.
    I was discovering that life just simply isn't fair and bask in the unsung glory of knowing that each obstacle overcome along the way only adds to the satisfaction in the end. Nothing great, after all, was ever accomplished by anyone sulking in his or her misery.
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    Re: BP Considering Suspension of Dividends

    Quote Originally Posted by Harry Guerrilla View Post
    For the most part, I want people to stop crying foul and playing the blame game until we can actually get the well under control.
    Until then, it is all the same "big oil" haters take pot shots at their favorite enemy.

    The reaction of the government is very similar to the Toyota floor peddle stick problems, lots of loud mouth, blow hards flying off the handle.
    If your "big oil hater" comment is directed at me, that is hilarious. I am a huge proponent of drilling and supporting oil companies.

    That said, the government reaction is what it is, but what it does not change is that until the well gets capped, BP's potential liability only increases with every barrell that escapes. That is just a fact.

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    Re: BP Considering Suspension of Dividends

    Just throwing some ideas out there, but could scuttling an old decommisioned Navy vessel over the oil leak possibly plug it?

    Wild idea, I know, but the focus has pretty much shifted to drilling a relief well and nothing more, which could take months.

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