25% of BP's market cap disappears in 4 days of trading

On June 4th, when we broke the story of the incredible rate at which BP's liability is increasing, the market valued BP at $122.6 billion USD.  Today, less than a week later on June 9th, their market cap has plummeted about 25% to $93.68 billion USD.  Today's announcement from U.S. DOI Secretary Ken Salazar that the government is about to revisit its estimates of the BP's gusher's flow rate, appears to have triggered today's one-day market decline of 15%.

The rest is probably due to a combination of factors including their promising but less than perfect attempts to cut and cap the well in addition to reports over the past few days that BP may need to begin pursuing a strategy of sequestering its massive Deepwater Horizon liabilities and shopping itself around for acquisition.

In general, you don't want a graph of your stock price over a week to look like this:

Perhaps that's why we're starting to see articles from the wags on Wall Street with titles like "BP May Not Make It" and "BP is Toast!"

BP's potential insolvency getting picked up by mainstream media

This morning the New York Times picked up on a story we broke in our original reporting last week, namely that BP is at risk of becoming insolvent due to their ever increasing liability as a result of the Deepwater Horizon oil disaster.

Though it doesn't go into the level of detail we did, the article is worth a read, as it takes a more acquisition oriented perspective as well as talks about the precedent of the once seemingly invincible Texaco filing for Chapter 11 bankruptcy in 1987 as a result of a billion dollar jury verdict.  As we reported last week, BP's Clean Water Act liability is going up at a rate of at least 1% of their current market cap every 2 weeks.

Keith Olbermann also broached the topic last night. Clip after the jump.

The death of British Petroleum? BP's Clean Water Act liability goes up by at least 1% of their current market cap every 2 weeks. Maybe that's why they're trying to move $10 billion dollars off their books before the amount of the fine can be certified.

Fun fact of the day: if you believe the latest, relatively conservative government flow rate estimates of the BP oil leak (19,000 barrels/day), BP is accruing fines at a rate of $81.7 million dollars per day, just for their statutory Clean Water Act liability ($4300/barrel, up from $3,000/barrel in the case of gross negligence under Title 33 USC § 1321).  BP's market cap at the moment is $122.6 billion dollars.

Independent analysts discover that the BP oil disaster is 10 times worse than BP says

NPR reported Friday that independent analysis has shown the BP "eventual worst-case" estimates to not even cover the current rate of flow from the oil leak they caused in the Gulf of Mexico, which has now been discovered to be about 70,000 barrels per day.  BP's current estimate of the leak is an order of magnitude off and they are in fact causing the equivalent of the Exxon-Valdez Oil Spill every four days. According to the New York Times, oil plumes "as large as 10 miles long, 3 miles wide and 300 feet thick" have begun to form in the Gulf of Mexico.

Below the fold you can see aerial video of this terrible spill with poignant commentary.

Has BP created an extinction level event?

I hate being alarmist, I really do.  In the case of the BP Deepwater Horizon Oil Disaster, however, I think a bit of potential alarmism may be appropriate.  Indeed, the worst case scenario is that this disaster turns out to be the first extinction level event caused by mankind.  And perhaps Though probably not the last.

The High Environmental and Human Costs of Oil Exploitation

As the world watches the scramble to save the shoreline and wildlife trapped in the path of the Beyond Petroleum (BP) oil spill in the Mexican Gulf, many unanswered questions resurface. Notably: what are the true costs of oil exploitation? And do the benefits really outweigh the costs?