Citigroup (NYSE:C) said a large number of their clients has been inquiring about the financial health of BP (NYSE:BP), and so have given their input on where the company stands at this time.
The giant bank said from the start that they don't see the need for them to protect themselves by declaring bankruptcy, or that they have any intention of neglecting their liabilities related to the oil spill.
There have been stories circulating on the possibility BP could be removed as the major partner on oil projects located in the U.S, but there's also the other side of it, on whether or not BP would want to keep doing business with the U.S.
From that point of view, Citigroup said it wold be difficult for BP to completely break from the U.S., as it would be highly complicated, although not impossible, to accomplish.
BP is also considered to be in strong financial health at this time, and may generate over $70 billion in operating cashflow from 2010 to 2011, with approximately $25 billion in net debt on their books.
While there are still uncertainties until final costs, it does look like they can handle the costs of cleanup and other liabilities related to the accident.
Citigroup remains a buyer of BP, but note the share price will continue to gyrate up and down on the speculators betting on the direction the company will go in the short term.
As other institutions have noted about BP, the market seems to be taking into account the worst case scenario with BP, and not the most likely of outcomes.
No comments:
Post a Comment