The ongoing catastrophe in the Gulf of Mexico has played havoc with not only the lives of those living in the region, but also with
British Petroleum’s stick price. Prior to the disaster, BP was considered one of the most prolific companies in the world. Now, investors are wondering whether or not the cleanup efforts will go relatively smoothly enough to allow BP’s stock price to get back on track. Add in the fact that President Obama has demanded action and
promises to make BP pay, and things could go from bad to worse for the oil giant.
Recent statements by BP
CEO Tony Hayward tried to assure shareholders and the public that BP has plenty of cash on hand to deal with the problem in the Gulf. However, according to the
Wall Street Journal, spill costs have reached $1.25 billion and counting, surely numbers that will concern any potential market investor.
So, with that said, SBR Forum is setting the following odds:
Will BP file for bankruptcy before 12-31-2010? (*odds newly adjusted June 16th)
Yes +300 (or 3 to 1)
No -400 (or 1 to 4)
“As cleanup costs accumulate, analysts are speculating whether BP will be forced to file for bankruptcy,” explains SBR Head Oddsmaker Justin Seven. “The extent of the spill continues to worsen, as does the estimated time period to control it. .”
Indeed,
White House Press Secretary Robert Gibbs was recently quoted as saying that BP will have to pay many billions. So, will cleanup costs soar and will BP honor their word and fork over for all of it, even if it means they declare bankruptcy?
Well, if the Nordic bank
Nordea is any indication, the SBR odds are on point not to see the stock rebound so quickly. Nordea sold sold all of its shares in BP, unimpressed with what they say is a lack of transparency in the oil spill matter.
The demonstrations throughout the U.S. can’t be having a great effect on the stock, either. Companies and shareholders want to find stocks at their lowest point in order to make money on the way up. But, many people can be swayed away or turned off by a company that’s seen in such a negative light.
Still, SBR’s odds have the YES side as the underdog, but not an impossible underdog. Should a sportsbook pick up these odds to offer them up for real betting, a $100 wager on this prop would land you $300, a decent return. So while Oddsmaker Seven believes the NO side will prevail, it’s certainly not a guarantee at this point - especially with BP unable to currently halt the leak.
"We've adjusted the odds significantly today (June 16, 2010) as a result of the Obama administration getting more publicly serious about BP ponying up for all the damage that the spill will cause," updates Steve Ricci, SBR Oddsmaker.
As for the cleanup efforts? We're told that leaking will go on until August. It's now a question of how much oil will be leaking from now until then.
Currently, BP stock is trading around $29, a far cry from where it was a few short months ago.
Where do you weigh in? What do you think will happen? Comment now in the forum thread.
Got a prop to suggest odds on? Email life@sbrforum.com
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