Dare you buy a BP share?

It's interesting that after all this time, the OP is still a valid question.

 

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Over the past couple of weeks or so, BP has been much better for US investors than for British investors. The London shares have 1/60th of the weighting of the NYSE shares, so to get the UK price from the US price you have to divide by the exchange rate and then by sixty.
NOW: US$39.25 / 1.588 / 60 -> GBP4.12

Because the value of the £ has strengthened so sharply against the $, a rise of a couple of dollars in the US price has been matched by a rise of only a penny in London:
WAS: US$37.25 / 1.510 / 60 -> GBP4.11

 

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I would always invest in this company. They may be British, but they're also 100% American.

 

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Well the markets here in the US were up 2 percent today. I think we are finally getting past this European "contagen" nonsense and finally looking at the real world. Thus far something like 70-80 percent of the companies reporting have exceeded both the bottom line and top line expectations.

 

"... BP Plc may not finish drilling a relief well to its Macondo well in the Gulf of Mexico, National Incident Commander Thad Allen said during a conference call today.

The relief well, which for months has been touted by the U.S. government as the ultimate solution to stopping the flow from Macondo -- a process known as “killing” the well -- may not be needed after all, Allen said.

BP has started a pressure test that may show that the Macondo oil well was killed adequately when it was plugged with mud and cement with a “static kill” last week, making the relief well unnecessary, Allen said. ..."

From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=au1Gla0dwhkw&pos=9

I don't know much about all this, but it would seem to me that the mud went in hole first and then when its weight (per sq.inch) equaled the oil pressure BP put a cement plug on top of the mud. Thus is it is only a question of years before the bottom parts of the mud start fall out of the drill pipe.

Also it does not make much economic sense for BP not to tap that oil via the expensive well they have essentially competed. That would over the years reduce the oil pressure.

Can anyone explain where I am wrong in my understanding?

 

Time to buy?
My guess is now.
London price 410p

Leak sealed.
US wanting to get back to business as usual.
They need BP's expertise.

 

No! You were ten days early!
River Ape is back in the market with 8000 London shares at 400.5p.
(London shares are weighted at 1/60th NYSE shares.)

 

I have not looked at BP but it might be a good buy now:

"... Halliburton Co. knew cement it mixed for BP Plc’s doomed Macondo well was unstable as much as two months before the April blowout that triggered the worst U.S. oil spill, a report to a presidential commission found. Halliburton dropped the most in almost two years in New York trading.

The staff of the National Commission on the BP Deepwater Horizon Oil Spill said documents provided by Halliburton showed at least three tests of the mixture, in February and April, found the recipe unstable. BP received data in March from at least one of the tests, the commission staff said in a letter today. ..."

From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=agD.9Be771DE&pos=8

SUMMARY: BP NOW KNOWS WHERE TO SEND THE BILL.

 

Except that Cement jobs can always fail.
That's why they do a negative pressure test after the cement is set, to see if the Cement is holding.
The Drillers misread the results of the Negative Pressure test and thus proceeded to remove the drilling mud.
What they should have done is added more cement until they got a good seal.
Arthur

 

Did you read the Bloomberg article I linked to? I think not as I believe it is speaking of the mixture used and than it failed IN THREE LAB TESTS to set properly.


Read it - perhaps my memory of it is wrong.

 

A final test using a modified testing procedure showed the cement would be stable,

But that's beside the point, you don't trust cement anyway, you test it and if it hasn't set up properly, you add more cement, or even add a different cement.

There is over 3 miles of pipe to work with between the reservoir and the BOP.

Arthur

 

So BP closed the year around $45 from the August low of $34. That is a 30% jump in 5 months...

BP Hits Six-Month High As Spill Claims Seen Lower

http://online.wsj.com/article/BT-CO-20110104-704588.html

 

..and that would have been a 50% return had I held it until year's end...

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No, the cement goes below the Mud, which they can do, even though there is Mud in the well.

The well is 50 miles off-shore and has nearly a 3 to 1 ratio of Gas to Oil.
There is no way currently to capture that much gas, and it is too valuable to flare off, so they cap it until the price of gas goes up or the logististics for capturing the gas are available (pipeline or surface vessel capable of doing that)


Arthur