British energy giant BP Plc’s stock price plunged to a 14-year low in US trading on Wednesday amid concerns over its ability to meet mounting costs of the giant Gulf of Mexico oil spill.
President Barack Obama’s administration, getting tough as polls show public disapproval over its handling of the worst oil spill in US history, threatened to impose new penalties on the company. BP depositary shares trading in New York fell nearly 16 percent to close at $29.20, their lowest level since August 1996, on growing worries about the costs the company will have to assume. BP said last week it has “plenty of” cash to deal with the problem and the Obama administration has made similar comments.
A BP spokesman said “nothing has changed” since Friday and restructuring experts agreed that by runing the numbers alone, BP looked able to handle the financial damage. But such confidence was not evident in the market.
“It seems that shares are under pressure from the fear of whether BP can survive. It is not just a rumor about the potential of a dividend cut in BP anymore. Now it’s about the survivability of the company,” said Jon Najarian, a founder of Web information site optionMonster.com in Chicago.
US interior secretary Ken Salazar told a Senate hearing he would ask the British oil major to repay the salaries of any workers laid
off because of the six-month moratorium on deepwater exploratory drilling imposed by the US government after the spill.
Turning up the heat on the beleagured company, a senior US justice department official said after the markets closed that the department was “planning to take action” to ensure BP had enough money on hand to cover damages from the spill. BP’s total bill so far, including cleanup costs, has reached $1.25 billion.
—Reuters