John Lounsbury
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May 31 11:27 AM
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All Comments by John Lounsbury »Is BP an Investment or Speculation? [View article]
You have hit on the key unknown - the follow on costs from the spill. If it costs as much per gallon as the Exxon Valdez (approximately $270 per gallon), the exposure is anywhere from 1/2 year of net BP earnings all the way to 5x earnings. The amount depends on what the flow rate of the leak actually is and whether it continues all the way to early August (first relief well completion) or stops soon.
If the leak continues past August, the liability will probably force BP into bankruptcy.
I discuss the various estimations of the amount of the spill and the potential remedial costs in an article today: seekingalpha.com/artic...