BP Gains in London as Drilling to Stop Leak Nears Completion

BP Plc rose for a second day as drilling for the relief well that will kill off the Gulf of Mexico oil spill nears completion.

The shares rose as much as 4.9 percent in London and traded at 345.80 pence as of 10:21 a.m. While that’s 16 percent higher than the stock’s low on June 25, the stock is still down 47 percent since the April 20 blowout on the Deepwater Horizon rig that killed 11 workers and started the leak on the ocean floor.
BP said yesterday that it may intercept the damaged Macondo well ahead of schedule this month, kicking off a “kill” process to end the worst oil spill in U.S. history. One of the two relief wells has reached a depth of 17,725 feet, within a few hundred feet of the target.
“The view is that the worst has now passed,” said Peter Hitchens, an analyst at Panmure Gordon & Co. in London. “If the uncertainty about the spill is taken away, you can start looking at fundamentals again.”
BP is a “good buy” after the drop in the share price, Shokri Ghanem, Libya’s top oil official, said in a Bloomberg Television interview today. He’s advising Libya’s sovereign wealth fund to take a stake in BP.

BP said yesterday that the cost of the spill response has risen to $3.1 billion. The company agreed last month to set aside $20 billion for cleanup and litigation related to the accident.

BP canceled three quarters of dividends, reduced investment plans and pledged to sell assets to pay for the fund. The company is said to be considering selling fields in Columbia, Venezula, Vietnam and Argentina raise cash.

BP was the biggest producer of oil and gas last year, beating Exxon Mobil Corp. for the first time. BP made $17 billion in profits for the year on $240 billion of revenue.

“The fear and uncertainty has driven the stock to a new low,” Panmure Gordon’s Hitchens said. “If the relief well can be finished soon, that would be really good news.”


--Editors: Stephen Cunningham, Rob Verdonck.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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