Tags: US | Oil | Stocks

Shares of Drilling Firms Tumble as Oil Spill Spreads

Friday, 30 Apr 2010 02:07 PM

Shares of several major oil companies and those that provide related services fell Friday as a massive oil spill cast a pall over the drilling business in the Gulf of Mexico.

Oil spewing from a deepwater well operated by BP PLC has reached Louisiana's wetlands. The White House put a hold on new offshore oil projects until the rig disaster that caused the spill is explained.

As the extent of the spill unfolded, investors sold off stocks of many companies that operate in the Gulf.

"A legitimate concern of investors is the impact of the blowout and oil spill on the reputations of the drilling services companies that were working on the rig at the time of the accident," Citigroup Global Markets analyst Robin Shoemaker stated.

Companies such as Halliburton, Transocean, Cameron International Corp. and Smith International Inc., have built solid reputations in past years. "They now see their safety record blemished in ways that could impact future business," Shoemaker wrote in a research note to clients.

During an appearance on ABC's "Good Morning America," David Axelrod, a top adviser to President Barack Obama, said no new oil drilling would be allowed until the cause of the disaster was determined.

The explosion occurred April 20 at BP's Deep Horizon oil rig, a mile underwater in the Gulf of Mexico. The leak is five times bigger than first believed and was spotted reaching the Mississippi River delta late Thursday.

BP operated the rig with a 75 percent interest. Anadarko Petroleum Corp. had a 25 percent non-operating interest.

BP had lost about $25 billion in market value as of the close of trading Thursday. Shares were up slightly on the New York Stock Exchange in morning trading.

Shares of Anadarko lost $2.49, or 3.6 percent, to $64.84; Transocean fell $5.92, or 7.5 percent, to $72.59; and Cameron were down slightly at $38.60 after dropping to $36 earlier.

Shares of Halliburton lost 92 cents to $30.68 and Smith fell 53 cents to $48.30.

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