BP Loses $22 Billion in Legacy of Share Buybacks

[dipsydoodle]

Source: Bloomberg

Add $22 billion and counting to the loss for BP Plc from the Gulf of Mexico disaster.

The sum represents the hole after the 53 percent plunge in BP shares since the Deepwater Horizon exploded and sank, resulting in the worst oil spill in U.S. history. BP bought back more than $37 billion of its stock in a bid to return money to investors between 2005 and 2008. Those shares are now worth $15 billion, excluding dividends.

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Because of the risks now associated with lending to BP, the company would pay an extra $566 million a year in interest costs to raise $10 billion in the bond market, compared with what it would have needed to before the accident.

The average yield on BP’s bonds has surged to 607 basis points, or 6.07 percentage points, more than benchmark rates, from 41 basis points before the rig explosion on April 20, according to Bank of America Merrill Lynch index data.

Read more: http://www.bloomberg.com/news/2010-06-27/bp-losing-21-billion-in-legacy-of-failed-buyback-during-oil-s-boom-years.html

[Demeter]

1. They Should Buy Back the Rest--It's a Bargain Now!

Cost Averaging, Doncha know?

[Make7]

2. They should have researched the safety record of the company before purchasing so many shares. (nt)

[SILVER__FOX52]

3. That was great !!

kudos to you.

[dixiegrrrrl]

4. LOL !!!!

Maybe they can sue themselves for not performing due diligence in the buyback.

[wordpix]

5. hahahaha, no doubt some shareholders WILL be suing

[damntexdem]

6. We need some deepwater drilling into BP's wallet fast!

Recover as much of the costs and fines as possible before the corporation completely loses its assets.

[GlennWRECK]

7. Wouldn't that be something...

Let's see it happen though

[LandR]

8. Will Fall Until Its Capped

BP stock hasn't been as low as it is now since 1996, when the cost of oil caused a crisis, but it did recover. BP's stock value will likely fall until the well is capped. BP will probably see 25% increase in its stock after the first week of the well being capped, but this is purely speculation, though it sounds reasonable to me. Furthermore, if the well is capped before August it would probably see an even better increase.