Sunday, June 20, 2010

How much money will the Oil Spill cost BP?

Total for clean-up costs and damages of $20 billion and fines of up to $17 billion (again, assuming no tax relief). That the decline in BP’s market value is two to three times larger than that partly reflects the uncertainty of the operation taking place.

SHOOT: If Hayward keeps sailing and making verbal gaffes, BP's debt will be priceless, if it isn't already.
clipped from
Using estimates of the likely size of the spill and the cost per barrel of cleaning up after Exxon Valdez, UBS reckons the bill could be $12 billion, of which BP’s share would be $8 billion (assuming the costs are not tax-deductible). An alternative approach is to assume BP carries on spending at its recent rate of about $40m a day for, say, a year. That works out at a total of $16.2 billion, or $10.5 billion for BP after its minority partners stump up their share.
Then there are fines.
The company could be facing a fine of $17 billion.
It is possible to reach hair-raising figures: the annual revenue of the tourist and fishing industries in the four states most affected, Alabama, Louisiana, Mississippi and Florida, is between $15 billion and $30 billion.
Most guesses, based on the idea that BP will have coastline and sea largely clean within a year, put the company on the hook for a further $5 billion-10 billion.
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