Monday, June 7, 2010

Goldman Sachs (NYSE:GS) Downgrades BP (NYSE:BP)

Saying the BP (NYSE:BP) accidend could end up costing the company $40 for every individual barrel spilled, Goldman Sachs (NYSE:GS) downgraded the oil giant from "Buy" to "Neutral."

Goldman also set a new price target of $52 for BP, down from the prior $69 they had estimated. Even that still offers potential increase in share price of 38 percent.

Using the Exxon Valdez oil spill in 1989 as a metric, which ended up costing Exxon Mobil (NYSE:XOM) $3.8 billion, equal to about $10 billion in 2010 dollars, they figure it will cost the company for the duration of the cleanup about $40,000 a barrel.

That ends up being approximately $10 billion for every 250,000 barrels leaked into the Gulf.

Other measurements used include the assumption the new cap will be able to capture 12 thousand barrels for every 15 thousand coming out of the well.

Goldman estimates that will come to about $23 billion after taxes, or $36 billion overall.

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