BP's share price plunged to a 14-year low yesterday as the battered oil giant admitted that the Deepwater Horizon disaster in the Gulf of Mexico had cost it $2.35bn (£1.57bn) so far.
The company's situation has deteriorated to such an extent that David Cameron was moved to issue his strongest statement yet on the disaster, saying yesterday that there must be clarity over the costs BP will incur from the spill to avoid its "destruction". "It is...in all our long-term interests that there is some clarity, some finality, to all of this, so that we don't...see the destruction of a company that is important for all our interests," the Prime Minister told the Canadian broadcaster CBC from the G8 summit in Ontario.
Mr Cameron said he still believed the matter called for gentle persuasion, brushing aside charges the issue was affecting Anglo-US relations.
"This isn't an issue between Britain and America. This is about BP doing what it should but also being treated in a way that enables it to go forward," he told reporters earlier.
"BP wants to cap the oil, it wants to clean up the oil, it wants to pay compensation to fishermen and hotel owners and people who have suffered and it should do that," he said. "It is in both Britain and America's interests that BP remains a strong and stable company."
BP's stock recovered slightly to close 6 per cent lower at 304.6p after plummeting by more than 8 per cent in early trading. Even after the recovery, BP's shares are still 54 per cent lower than they were before the explosion on 20 April killed 11 people and triggered a leak a mile down on the sea floor that is still only partially contained.
BP said the £2.35bn costs incurred to date include efforts to stem the spill and clean up the oil, as well as grants to US states along the Gulf coast, federal costs and claims paid. Nearly 74,000 claims have been filed, and more than 39,000 payments totalling nearly $126m have been made. So far, the costs are still manageable for a company which generated $30bn in cash over the past four quarters. Tony Hayward, the embattled chief executive, reassured British staff this week that the company's health had stabilised and it had moved into the "intensive care" ward.
But with no clear picture of what the final bill may be, BP's finances are under a spotlight and the market is awash with speculation about possible fund-raising plans. Under pressure from President Barack Obama, the company agreed last week to set up a $20bn fund to cover claims arising from the spill, as well as suspending dividend payments for the rest of the year and slashing capital expenditure.
The broken oil well is estimated to be pumping between 35,000 and 60,000 barrels of crude into the sea each day. Although Tropical Storm Alex now looks unlikely to reach the Gulf, the storm still heralds the start of the hurricane season. And a major storm will require all containment systems to be disconnected from their storage ships.
BP is in a race against time, according to Malcolm Graham-Wood at Westhouse Securities. The company has assets worth about $130bn but shares valued at only $50bn. "All the fundamentals point to BP being oversold," said Mr Graham-Wood. "But the risks here are still very high and it could easily get worse before it gets better. If we get a hurricane through there all bets are off."