Tags: BP | Shares | Rebound | US

BP's Shares Rebound in US as More Spilled Oil Collected

Thursday, 10 Jun 2010 11:42 AM

U.S. shares of oil company BP rebounded more than 10 percent in early trade on Thursday, a day after plunging nearly 16 percent on mounting fears about how the company will cope with the massive costs of the oil spill in the Gulf of Mexico.

Meanwhile, BP announced Thursday that its containment cap system at a Gulf of Mexico oil leak collected 15,800 barrels of oil on Wednesday, showing a small increase in the capture rate.

The company's London shares were last down 6.1 percent, hitting their lowest level since 1997 as they caught up to the losses in the US that occurred after the close of London markets.

Several analysts said the selloff in BP was not justified because the company still has ample cash reserves to cover the clean-up costs of the spill, but that the political pressures had created uncertainty in the markets.

"It's tough to make price predictions on the stock, but I think the downside risks are outweighed by the near-term upside potential," said Mike Breard, analyst with Hodges Capital Management in Dallas.

Much of the activity in BP appeared to be linked to dealers trading the spread between US and London shares, he said.

BP's American depositary shares were last up more than 11 percent in early trade, at around $32.50 a share.

The cap system collected 15,010 barrels in the previous 24-hour period, BP said, putting its cumulative collection total at 73,324 barrels, or 3,080,000 gallons, according to figures compiled by the company.

"Operations were stable," BP said Thursday.

The British energy giant is working to nearly double its surface capacity to handle oil collected from the seabed.

Transocean's Discoverer Enterprise drillship, which is receiving the oil through a pipe connected to the top of the containment cap at the wellhead, can process up to 18,000 barrels a day of oil.

The company also said it is preparing a service rig used for BP's failed "top kill" attempt to smother the leak last month to receive and burn off 5,000 to 10,000 barrels of oil.

The oil would have to be burned off because that rig has no storage capacity, according to BP.

U.S. government scientists have estimated the leak to range from 12,000 barrels to 19,000 barrels a day, with one estimate as high as 25,000 barrels a day. That team is revisiting its data to reach a more solid estimate of the flow rate.

The containment cap, placed atop the gushing well pipe a mile below the ocean surface, is funneling some of the escaping oil and gas from the bottom of the Gulf of Mexico to the surface to be collected in ships and taken away. An undetermined amount of oil continues to escape from the cap into the ocean.

The system is BP's most successful effort so far to corral the leak, which began after Transocean's Deepwater Horizon drilling rig exploded and sank in April, killing 11 workers.

© 2017 Thomson/Reuters. All rights reserved.

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U.S. shares of oil company BP rebounded more than 10 percent in early trade on Thursday, a day after plunging nearly 16 percent on mounting fears about how the company will cope with the massive costs of the oil spill in the Gulf of Mexico. Meanwhile, BP announced Thursday...
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