Watch VideoPlay Video
On the heels of BP's announcement that embattled CEO Tony Hayward will step down, many seem more concerned about the future of the company itself. It remains to be seen whether the British oil giant will be able to cover all costs resulting from the catastrophic oil spill in the Gulf of Mexico?
BP's shares have shrunk by 100 billion US dollars.
In addition to the plunge in the company's share price, ratings agencies have downgraded BP bonds to junk. Some investors are now looking to take advantage of the opportunity to acquire a stake in the company.
British media reports claim BP has already asked many investment consultants to canvass for rivals and sovereign funds, hoping to sell off five to ten percent of the company's stakes.
For BP, its largest concern is covering the immense bill for the oil spill in the Gulf of Mexico. This June, BP's senior executives spoke with US President Barack Obama and agreed to open a 20-billion US dollar Third Party Compensation Account. The money will be used to compensate residents around the Gulf over the next three and a half years.
Analysts say the final compensation will amount to 30 to 40 billion US dollars, while Goldman Sachs has estimated that number could reach 70 billion.
One out of seven pounds in Britain's pension fund comes from BP.
This is what connects the fate of BP to British investors. What's more, BP offers job opportunities for more than 10-thousand people in the UK, and 80-thousand worldwide.
Analysts predict the shadow of the oil spill will linger on for years, despite the fact that BP finally seems to have controlled the problem.
Whether BP is able to march out of the current predicament, will depend largely on how the company deals with the aftermath, and whether it can make good on its fiscal responsibilities.
- BP suffers major loss in Q2 2010-07-28