Asset sale talk drives BP shares

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LONDON – BP shares rose to their highest in nearly a month yesterday, driven by reports of asset disposals to help pay for the company’s US oil spill and hopes for a new system to capture almost all the spewing oil.
BP said the cost of the spill was now about $3,5 billion (£2,3 billion), and that it had collected or flared 749 100 barrels of oil from the well, which ruptured in an explosion in the Gulf of Mexico on April 20 that killed 11 people. The British oil company is under enormous pressure to halt the oil, which has polluted coastlines on five US Gulf states, threatened multi-billion dollar fishing and tourism industries and killed birds, sea turtles and dolphins.
BP is installing a new capping system that could capture up to 80,000 barrels per day (3.4 million gallons/12.7 million litres), up from about 25 000 bpd. Robots operating a mile under the ocean surface will take up to a week to put the system in place.
BP shares rose 6.9 % to 390 pence to be the top gainers in Europe, hitting their highest since June 14 and setting them on track for their biggest one-day gain since June 17. A source familiar with the situation said on Sunday that BP was in talks with US oil and gas company Apache Corp and other companies over potential asset sales, and the Sunday Times reported that the talks involved $12 billion in assets.
The Wall Street Journal said BP was in talks with a number of companies on a spectrum of assets. BP declined to comment on the reports. “The news appearing in the newspapers that they’re about to sell all sorts of assets and raise the cash they need for the claim fund is reassuring,” said Irene Himona, analyst at Exane BNP Paribas in London.
“There’s an awful lot of noise in the press about everything, including cementing this thing, selling assets, following the complete collapse in the stock and the usual market undershoot, and now all the noise is on the positive side,” she said. BP said that its first relief well, through which it plans to pump specialised heavy fluids into the original well, was likely to be completed by the first half of August as originally planned.
“There is a huge sigh of relief in the market that the news around BP isn’t getting any worse at the moment. But of course everyone is waiting anxiously to know more about the outcome of the relief well,” said a fund manager who asked not to be identified.
“It is also not that surprising that the stock has started to recover somewhat — it was heavily sold prior to this and the speed of the fall towards the end suggests that the selling was pretty indiscriminate,” he said.