BP punished as shares hit 14-year low

Beleaguered oil giant BP took more stock market punishment today as shares collapsed to a 14-year low amid growing fears of a short-term funding crisis sparked by the Gulf of Mexico disaster.

As much as £5.5 billion was wiped off the under-fire oil giant as shares plunged 9% at one point to below 300p - levels not seen since August 1996.



BP rallied slightly but finished more than 6% down - the worst performer in the FTSE 100 Index. It has now seen its market value tumble by more than £60 billion since the Deepwater Horizon oil rig exploded on April 20, killing 11 workers.



Despite assurances over measures to improve the capture of oil and progress on relief wells to kill the flow, BP said clean-up costs had risen to 2.35 billion US dollars (£1.6 billion).



And insuring BP's debt for five years now costs 5.85% - meaning an investor holding £10 million in BP debt must pay £585,000 to protect itself against default, according to financial research firm Markit.



The cost of insuring for one year is higher at 7.25% - a clear signal of market worries over the immediate costs faced by BP which would make any debt funding move far more expensive.



Analysts at Nomura said a 10 billion dollar (£6.7 billion) funding injection from a major investor such as a Middle East wealth fund could shore up market doubts at a time when debt funding is dear and asset sales may take time.



The move would be similar to that made by Barclays at the height of the financial crisis in 2008, when the bank raised emergency capital from Abu Dhabi and Qatar to avoid taking taxpayer cash.



BP insists it is in a strong position to tackle the spill - generating 30 billion dollars (£20.1 billion) in cash a year, with 10 billion dollars in committed or stand-by banking facilities, planned asset sales of 10 billion dollars and around five billion dollars (£3.4 billion) saved from cutting the dividend.



But there are also worries over the approaching hurricane season in the Gulf, with reports of a potential storm next week that could hamper the response operation.



CMC Markets analyst Michael Hewson said: "With bad weather closing in it seems that BP continues to lurch from one crisis to another."



The group has so far captured around 364,500 barrels of oil through its containment system, but it is estimated around 35,000 to 60,000 barrels a day are continuing to pour from the well.



BP chief executive Tony Hayward officially handed over day-to-day control of the Gulf of Mexico crisis to BP board director Bob Dudley earlier this week as it set up a new division to manage the spill.



The group was reportedly planning a mammoth fundraising programme to shore up its finances as the clean-up bill soars.



As well as the ongoing cost of the operation and claims, it has also set aside a 20 billion dollar (£13.5 billion) compensation fund for those affected by the spill.



Mr Hayward is said to have told staff yesterday that operating results due out next month will be "very strong", although he recognised the group's need to sell assets and show balance sheet strength to deal with the liabilities.



Nomura said worries over short-term credit risk were "highly damaging" for BP, limiting its ability to fund at attractive rates as well as sell off assets at decent prices.



"We see pressure growing on the company to assure sufficient funding to cap the well," Nomura's Alastair Syme said.

PROMOTED VIDEO
Life and Style
fashionHealth concerns and 'pornified' perceptions have made women more conscious at the beach
Arts and Entertainment
tv
Sport
Ojo Onaolapo celebrates winning the bronze medal
commonwealth games
Arts and Entertainment
Rock band Led Zeppelin in the early 1970s
musicLed Zeppelin to release alternative Stairway To Heaven after 43 years
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmHe was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
Sport
Van Gaal said that his challenge in taking over Bobby Robson's Barcelona team in 1993 has been easier than the task of resurrecting the current United side
footballA colourful discussion on tactics, the merits of the English footballer and rebuilding Manchester United
Life and Style
Sainsbury's could roll the lorries out across its whole fleet if they are successful
tech
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Travel
The shipping news: a typical Snoozebox construction
travelSpending the night in a shipping container doesn't sound appealing, but mobile crash pads are popping up at the summer's biggest events
Arts and Entertainment
'Old Fashioned' will be a different kind of love story to '50 Shades'
film
Arts and Entertainment
Tracey Emin's 'My Bed' is returning to the Tate more than 15 years after it first caused shockwaves at the gallery
artTracey Emin's bed returns to the Tate after record sale
Arts and Entertainment
Smart mover: Peter Bazalgette
filmHow live cinema screenings can boost arts audiences
Environment
Neil Young performing at Hyde Park, London, earlier this month
environment
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Project Manager (HR)- Bristol - Upto £400 p/day

£350 - £400 per annum + competitive: Orgtel: Project Manager (specializing in ...

Graduate / Trainee Recruitment Consultant - IT

£25000 per annum + OTE £40,000: SThree: Orgtel are seeking Graduate Trainee Re...

HR Business Partner - Banking Finance - Brentwood - £45K

£45000 per annum + Benefits: Ashdown Group: ** HR Business Partner - Senior H...

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz