BP's Stock plunges, Talks of Bankruptcy

[loveadobie]

BP stock is plunging, there's concerns that they will not have enough money to pay all that is owed for repairs, cleanups, etc. Now rumors of bankruptcy.

Why is that not a surprise.

I think tax payers will be on the hook for this one too.

 

[bicker]

Yes, I think so. That's one reason why I've been so critical of things like the calls to boycott BP gas stations: Not only does it mostly harm small businesses in your local area (the gas stations are generally not owned by BP, but by local people), but it also would tend to leave BP less able to pay what will be needed for cleanup, and to satisfy other claims related to the spill.

We humans often do react to a situation without thinking it all the way through, and as a result end up doing things that actually harm ourselves substantially.

 

[Jennasis]

I have been under the assumption for some time that BP would go belly up due to the spill.

 

[BunsenH]

If I patronize a BP station, am I not paying for the clean-up?

Would their profit on my purchases be less than my share as a taxpayer if they legally squirm out of their obligation?

I realize that the station owner is penalized, but changing brands seems to be a simple process.

 

[DisneyBamaFan]

Their net profits for Q1 2010 were $5,598 Billion. They have not even spent $1Billion so far. There is no way that they are near bankruptcy yet. No judge would allow them to walk away from this so quickly with their reserves.

I am not saying that they will not end up in bankruptcy court some day, but it will be some time before it happens. This is an excerpt from their response to the stock price drop:

Under the current trading environment, we are generating significant additional cash flow. In addition, our gearing is currently below the bottom of our targeted range. Our asset base is strong and valuable, with more than 18bn barrels of proved reserves and 63bn barrels of resources as at the end of 2009. All of the above gives us significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims.

 

[eliza61]

Yes, I think so. That's one reason why I've been so critical of things like the calls to boycott BP gas stations: Not only does it mostly harm small businesses in your local area (the gas stations are generally not owned by BP, but by local people), but it also would tend to leave BP less able to pay what will be needed for cleanup, and to satisfy other claims related to the spill.

We humans often do react to a situation without thinking it all the way through, and as a result end up doing things that actually harm ourselves substantially.

Along with the fact that BP does not get the bulk of it's profit from selling gas. BP is "energy" company. Gasoline brings in a very small margin. Oil, natural gas exploration and refining is a huge chunk of the money and boycott your local station will not really affect (or is it effect?) that.

Their company page says it all, they call themselves "Beyond Petroleum"

I'm not buying the bankrupcty bit either. Sure, this years profits are in the toilet but BP has rountinely hit profits of > 1 billion

 

[bettymae1121]

Everything I've heard about BP's finances states that they've got PLENTY of money. They are about to pay dividends to their stock holders, and say they have enough to pay for the cleanup and damages PLUS pay the dividend and make a nice profit for the year. I don't think BK is in the near or even distant future for them.

 

[loveadobie]

I believe that BP is trying to set themselves up to avoid paying as much of this liability as they can.

This will certainly end up in the courts.

 

[DawnCt1]

Yes, I think so. That's one reason why I've been so critical of things like the calls to boycott BP gas stations: Not only does it mostly harm small businesses in your local area (the gas stations are generally not owned by BP, but by local people), but it also would tend to leave BP less able to pay what will be needed for cleanup, and to satisfy other claims related to the spill.

We humans often do react to a situation without thinking it all the way through, and as a result end up doing things that actually harm ourselves substantially.

I absolutely agree and I have been saying this from day one. To demonize a company which hires thousands of people and who thousands of other small businesses depend upon hurts our entire economy and ultimately ourselves. I have been making it a point to fill up at BP because frankly they need the money because WE are going to need the money. Doing otherwise is biting our noses to spite our faces.

 

[DawnCt1]

Everything I've heard about BP's finances states that they've got PLENTY of money. They are about to pay dividends to their stock holders, and say they have enough to pay for the cleanup and damages PLUS pay the dividend and make a nice profit for the year. I don't think BK is in the near or even distant future for them.

And if they don't pay dividends, where are those shareholders going to go? Their stock has already dropped at least 30%. One out of six pensioners in the UK is dependent upon their pension checks so the UK isn't "thrilled" about the demonization of BP. Companies NEED to make a nice profit to attract investors and stay in business. Lawsuits against BP will continue for 20 years.

 

[bettymae1121]

And if they don't pay dividends, where are those shareholders going to go? Their stock has already dropped at least 30%. One out of six pensioners in the UK is dependent upon their pension checks so the UK isn't "thrilled" about the demonization of BP. Companies NEED to make a nice profit to attract investors and stay in business. Lawsuits against BP will continue for 20 years.

Where in my post does it say they shouldn't pay the dividends? All I stated is that they are currently planning on paying for both the dividends and the cleanup and potential damage claims.

If they didn't have the money to do both, then that would be different, but where things stand now it looks like they can afford to do both.

 

[cteddiesgirl]

I believe that BP is trying to set themselves up to avoid paying as much of this liability as they can.

This will certainly end up in the courts.

Yep. It was just on GMA this morning that they said they had more than enough money to pay for this mess. Now they're coming up with this.
As it's been said, their profits don't come solely from the selling of gas.

And if they don't pay dividends, where are those shareholders going to go? Their stock has already dropped at least 30%. One out of six pensioners in the UK is dependent upon their pension checks so the UK isn't "thrilled" about the demonization of BP. Companies NEED to make a nice profit to attract investors and stay in business. Lawsuits against BP will continue for 20 years.

Well, if BP didn't have such a bad reputation already, if they weren't setting themselves up to try to get off by paying out a little as possible on this disaster, and if they actually went over and above what they need to do to fix this disaster, clean up the mess and fix their other problems, it would go a long way towards people possibly forgiving them. Therefore, helping to raise their stocks and profits.

But, I don't think BP execs have anything on their minds other than trying to line their pockets while shafting everyone and everything else. That has been their track record so far, and this seems their next step towards that.

 

[DisMN]

Yes, I think so. That's one reason why I've been so critical of things like the calls to boycott BP gas stations: Not only does it mostly harm small businesses in your local area (the gas stations are generally not owned by BP, but by local people), but it also would tend to leave BP less able to pay what will be needed for cleanup, and to satisfy other claims related to the spill.

We humans often do react to a situation without thinking it all the way through, and as a result end up doing things that actually harm ourselves substantially.

My thoughts exactly but I've found I'm in the minority. Many friends and family members are talking (and acting on) boycotting BP which I think is definitely the wrong way to go about it. Put BP out of business by not buying their product and who then pays this cleanup bill?

I absolutely agree and I have been saying this from day one. To demonize a company which hires thousands of people and who thousands of other small businesses depend upon hurts our entire economy and ultimately ourselves. I have been making it a point to fill up at BP because frankly they need the money because WE are going to need the money. Doing otherwise is biting our noses to spite our faces.

I've heard quite a few comments that people actually want BP to fail.

Yep. It was just on GMA this morning that they said they had more than enough money to pay for this mess. Now they're coming up with this.
As it's been said, their profits don't come solely from the selling of gas.



Well, if BP didn't have such a bad reputation already, if they weren't setting themselves up to try to get off by paying out a little as possible on this disaster, and if they actually went over and above what they need to do to fix this disaster, clean up the mess and fix their other problems, it would go a long way towards people possibly forgiving them. Therefore, helping to raise their stocks and profits.

But, I don't think BP execs have anything on their minds other than trying to line their pockets while shafting everyone and everything else. That has been their track record so far, and this seems their next step towards that.

I'm hoping the rumors on their demise slow down a bit because I'd hate to see this be a self fulfilling prophecy.
Personally I do think they're trying but the hypercriticism just enforces the feeling that BP can't do anything right.......they're damned if they do and damned if they don't.

 

[eliza61]

One of the greatest tools a consumer has, is our buying power.

I have and do boycott businesses I feel engage in practices that go against what I believe in, whether they be big, small or in between.

I worked for an large retail giant that treated us employees horribly, I refuse to give them my patronage simply because the hire "locals".

If you feel that BP, is not a company that you can in good faith continue to support, then by all means boycott.

 

[Art 1]

I absolutely agree and I have been saying this from day one. To demonize a company which hires thousands of people and who thousands of other small businesses depend upon hurts our entire economy and ultimately ourselves. I have been making it a point to fill up at BP because frankly they need the money because WE are going to need the money. Doing otherwise is biting our noses to spite our faces.

I agree, I have been buying over $1000 of gas each MONTH from them for many years. I am going to continue to do so.

 

[DawnCt1]

Yep. It was just on GMA this morning that they said they had more than enough money to pay for this mess. Now they're coming up with this.
As it's been said, their profits don't come solely from the selling of gas.



Well, if BP didn't have such a bad reputation already, if they weren't setting themselves up to try to get off by paying out a little as possible on this disaster, and if they actually went over and above what they need to do to fix this disaster, clean up the mess and fix their other problems, it would go a long way towards people possibly forgiving them. Therefore, helping to raise their stocks and profits.

But, I don't think BP execs have anything on their minds other than trying to line their pockets while shafting everyone and everything else. That has been their track record so far, and this seems their next step towards that.

Investors do not necessarily care if they have stock in a "nice" company. They care if they have stock in a profitable company. A company that can't survive can't pay for damages and reparation.

 

[DawnCt1]

One of the greatest tools a consumer has, is our buying power.

I have and do boycott businesses I feel engage in practices that go against what I believe in, whether they be big, small or in between.

I worked for an large retail giant that treated us employees horribly, I refuse to give them my patronage simply because the hire "locals".

If you feel that BP, is not a company that you can in good faith continue to support, then by all means boycott.

And when they fail, investors refuse to invest because the stock price is falling and they go bankrupt, thus end up unable to pay the claims, will you consider that a boycott may have lead to their downfall?

 

[eliza61]

And when they fail, investors refuse to invest because the stock price is falling and they go bankrupt, thus end up unable to pay the claims, will you consider that a boycott may have lead to their downfall?

You're absolutely right, that is a distinct possibility. There is also the possibility that a boycott may lead to the company acting ethically, which in turn could lead into even more profitability. It's definitely a crap shot.

Investors may not care if they have a "nice" company but they certainly care about their reputation and perception. Exactly the reason BP rushed to get some "feel" good commercials up and running.
The reason why Disneyworld, coke and Mcdonalds keep tight rein on their brands.

So then the question becomes do I support a company that operates counter to every thing I believe in so it can survive? or do I hope that enough people voicing their displeasure the only effective way we have and that's with our dollars will cause stockholders and company management to practice business a bit more ethically?

If I continue to support a company who is accused (nothing has been proven yet) of putting profit ahead of safety directly leading to the deaths of 11 men and destruction of livilihood of countless others along with the destruction of an entire region, I'd not feel to good about it.

There's an old saying in business "The first principle of good business is to first have principles"

 

[DisneyBamaFan]

...Investors may not care if they have a "nice" company but they certainly care about their reputation and perception...

Then explain how tobacco companies are able to sell their stock at any price. They sell cancer, and their stock is among the best in the history of the market.

 

[eliza61]

Then explain how tobacco companies are able to sell their stock at any price. They sell cancer, and their stock is among the best in the history of the market.

LOL Addiction.

And cigerattes are still marketed as "hip and cool" especially to young people so they are very very concerned about their images. Why do you think so many people tried to get that "Joe Camel" campaign shut down? While the number of smokers in the U.S. may be declining the number world wide seems to be increasing in spite of the anti smoking messages. So it's not surprising that the stock does well.
http://www.dummies.com/how-to/content/scanning-the-statistics-on-smoking.html

The tobacco company also uses the if you "outlaw us, we'll go bankrupt and have to layoff millions of people" argument.

So once again, it becomes a consumers personal choice. I'm just not into the argument of "don't boycott some thing because you'll cause the company to go under" argument of giving some one my hard earned dollars.