Could Gulf oil spill bankrupt BP?

[Lone_Star_Dem]

BP is now paying $40 million a day to deal with the Gulf oil spill. Its overall costs are nearing $1 billion, and an expected tide of litigation is still ahead. Then again, BP is flush with cash.

Though the BP oil spill continues unabated, it is too early to write BP's corporate obituary, say industry analysts.

Yes, the company’s value in the stock market has shrunk by $70 billion since the incident. On Tuesday alone, the company’s stock sank by $19 billion.

But the company has some of the deepest pockets in the world. And the greatest concern to BP – the possible litigation – might stretch on for decades, defraying the costs, as happened in the Exxon Valdez oil spill.

“Talking about the demise of BP is premature,” says Phil Flynn, director of research at PFH Best Research in Chicago. “Yes, this is larger than the Exxon Valdez but it’s premature to say this will put BP out of business.”

Although any civil or criminal liabilities could be huge, analysts point out that BP has significant financial wherewithal. In 2009, a bad year for the company, it had revenue of $239.8 billion and had a net profit of $16.5 billion.

“BP in terms of its balance sheet is fairly strong,” says Matti Teittinen, senior equity analyst at IHS Herold in Boston. “They have made $8 billion in acquisitions in 2010 so far, so I don’t think the prospect of spending $5 billion on the clean-up is something that really scares them.”

Read more: http://www.csmonitor.com/USA/2010/0601/Could-Gulf-oil-spill-bankrupt-BP

[Jackpine Radical]

1. Is there a God?

[cbdo2007]

2. can't they just write it all off as a "loss"?

Even if it costs more than they make this year I think they can save losses and then write them off on subsequent years, so even after they fix the leak and begin cleaning up the spill, and begin turning a profit again all they need to do is write off the prior loss against those profits and they'll be in the clear and not have to pay any taxes for the next 5 years or so.

[dipsydoodle]

4. They're registered in the UK ,rather than simply being a British company ,

and so come under our accounting rules : not GAP. They pay UK tax in substantial amounts under normal circumstances. Givne current circumstances the loss of tax revenue will adversly affect the UK.

[mod mom]

3. I'm afraid corp Execs will realize this pay themselves huge bonuses then bankrupt the co

This is why Robert Reich is correct in that Obama needs to move on BP now, before this can happen.

[BeFree]

5. Eh? BankruPt

Where have I read this before? Oh yeah...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=8245583&mesg_id=8245726