Friday, August 6, 2010

Why is BP (NYSE:BP) Not Committing to Cementing Relief Well?

The apparent turnaround by BP (NYSE:BP) in regard to pumping the relief well full of mud and cement to permanently plug the oil well, speaks to something happening behind the scenes which isn't being communicated to the public.

Lately when asked about injecting the oil well for the bottom kill, BP hasn't said they're going to plug the well permanently, seeming to say they're considering doing something with the oil rather than trapping below the Gulf floor with no profitable way to extract it again.

That speaks to coming back some day and resuming operations, which after things calm down, they could attempt, or more likely, it speaks to them thinking in terms of selling the asset to another oil company.

The estimated amount of oil left in the well is a little over 45,000 barrels, which would fetch well over $3 billion. BP is probably thinking why waste the oil when they could sell the asset as part of the process of raising capital.

But the sensitive nature of coming out with that at this time would cause a new round of criticism from some quarters, and would detract from the success in finally getting a handle on the leaking oil.

There can be no doubt the government is talking with BP behind the scenes about this, although they are sure not to admit to this, at least no anytime soon.

It makes sense to not waste the oil, which American consumers so desperately need, and to not to waste the capital BP could raise help them over the next several years.

1 comment:

Gary said...

"The estimated amount of oil left in the well is a little over 45,000 barrels, which would fetch well over $3 billion. BP is probably thinking why waste the oil when they could sell the asset as part of the process of raising capital."

You might want to revisit your math. At $80 per barrel, 45,000 bbls is worth $3.6 million, not "over $3 billion." In the overall scheme of things, $3.6 million is chump change, isn't it?