Shares in London-based BP fell seven per cent yesterday after the oil major said a leaking well in the Gulf of Mexico was gushing at five times the rate initially thought.
Investors are growing increasingly concerned about the impact of the leak. Since the Deepwater Horizon drilling rig caught fire, BP’s shares have fallen 11 per cent, knocking around $20bn off its market capitalisation. The drop is despite the company reporting much better than expected first quarter results on Tuesday.
BP’s shares finished down 6.5 per cent at 584.2p. BP said the clean-up operation was costing it $4m a day, although this is likely to increase sharply if the slick hits land. BP could face much higher costs from potential lawsuits, punitive damages and reputational damage, which would hit its ability to grow output in the US, its most important market. The clean-up team, which includes the US Coast Guard and other agencies, began a controlled burn on parts of the slick on Wednesday, to try and limit the amount of oil that looks set to hit the shore.
Eleven workers are missing and presumed dead after the worst oil rig disaster in almost a decade. Swiss-based Transocean’s Deepwater Horizon rig sank on 22 April, two days after it exploded and caught fire while it was finishing a well for BP about 40 miles (64 km) southeast of the mouth of the Mississippi River.
Five thousand barrels of oil are leaking a day, up from an earlier estimate of 1,000 barrels.
City A.M. Reporter