Thursday, September 9, 2010

JP Morgan's (NYSE:JPM) Analysis of BP (NYSE:BP) Report

Several financial institutions responded positively to the BP (NYSE:BP) report, not necessarily to its content, but to its purpose, and JP Morgan (NYSE:JPM), along with others, believe BP made a solid move toward defining the narrative.

Morgan said, “In a stock market that has been critically short accurate information on a highly technical event, today’s report is another important step forward (along with capping the well on 15 July). We believe Chapter 1 of this event was trying to quantify the total gross liabilities. In our view, Chapter 2 is about understanding cause and apportioning responsibilities. We will then reach Chapter 3 – settlements.”

Chapter 2, as defined by JP Morgan, is where BP is at now, and if they're successful, they will have moved billions of dollars in responsibility from themselves and spread it to partners and contractors who were part of the operations leading to the failed oil rig.

The major hurdle is positioning themselves as strongly as they can to avoid being designated as being grossly negligent in the accident. The report was directly aiming at that, as well as the secondary issue of pointing the finger at others without seeming to accuse them of anything; they used the technical evidence and reports on other failures to do the job.

Halliburton (NYSE:HAL) and Transocean (NYSE:RIG) went on the offensive almost immediately, as they were specifically singled out as failing at their jobs in specific points leading to the explosion.


Anonymous said...

HAL and RIG ...will HAVE to pay and will pay...because they are holding part of mistake...and don't they share profits from Macando well? why not share losses also now?

Anonymous said...

Just to clarify previous comment. Only companies with a Working Interest (WI) will share profit. I do not think that HAL and RIG has a WI in the well. They are just contractors.