June 25, 2010
BP Plc slumped to a 14-year low in London trading on mounting costs to clean up the Gulf of Mexico oil spill amid concerns the first tropical storm of the Atlantic hurricane season may hamper efforts to halt the leak.
BP fell as much as 24.50 pence, or 7.5 percent, to 300.75 pence, the lowest since Aug. 7, 1996. The company has lost 54 percent of its market value since the April 20 explosion on the Deepwater Horizon rig, which killed 11 crew members and triggered the spill.
“It’s obviously not good news for BP,” said Colin Morton, who helps manage about $1.7 billion at Rensburg Fund Management in Leeds, England. “Who is going to buy the stock ahead of the potential hurricane?”
BP should sell shares to counter concerns that cleanup and liability costs will make it unable to pay creditors, according to Alastair Syme, an analyst at Nomura Holdings Inc. in London. The cost to protect BP bonds against default has climbed even after it agreed to set aside funds over several years to cover spill expenses. While BP can access about $15 billion in cash, the Atlantic hurricane season is unsettling for investors, Syme said.