BP PLC is public enemy No. 1 in the United States.
Anti-BP demonstrations are flaring up across the country. The starburst green and yellow BP logos, which once stood for "Beyond Petroleum," are being defaced at BP gas stations. A Facebook page advocating a BP boycott had more than 360,000 supporters by Friday, the same day that U.S. consumer advocacy group Public Citizen led a mass rally against the British company and its hapless CEO, Tony Hayward. The New York Daily News called him "the most hated - and clueless - man in America."
While the protests and boycotts have smeared BP's reputation across the globe, they are nothing compared to the price it might have to pay for the biggest oil spill in U.S. history: The potential destruction of Britain's mightiest company.
BP's London-listed shares went into freefall early in the week, when increasingly desperate efforts to stop the subsea blowout failed and the U.S. Justice Department launched a criminal investigation into the spill. Since flames melted the Deepwater Horizon drilling rig on April 20, sending it to the bottom of the Gulf of Mexico with 11 of its crew, BP has lost a third of its value, equivalent to more than $60-billion (U.S.). That's almost as much as the value of Royal Bank of Canada, the world's 10th-largest bank.
In a conference call with analysts Friday, Mr. Hayward and BP chairman Carl-Henric Svanberg rejected suggestions by U.S. senators that BP cut its nearly $3-billion quarterly dividend until the oil spill is contained. Mr. Hayward and Mr. Svanberg insisted BP has the financial capability to both shoulder the cleanup costs and continue the dividend, at least for now.
BP managed to secure a cap on the Macondo well Thursday night and is siphoning off some oil, although it will take 48 hours to assess the success of the cap-and-siphon approach.
The legal battle will be long and slow. Jim Buckee, the former CEO of Talisman Energy Inc., which began life as BP Canada.
As the broken well fouls ever larger swaths of the Gulf, and lawsuits spread faster than the oil slick, analysts, investors and lawyers are placing their bets on BP's ability to survive intact.
A few weeks ago, when BP was relatively confident it could stem the flow, there was little sense that BP faced anything more than a very expensive cleanup bill. While some still think that's the case, others say the company's breakup, takeover by a rival energy heavyweight, or bankruptcy in whole or in part is probable, if not certain. "BP could be facing the death penalty in the U.S.," said energy analyst John Kilduff, of New York hedge fund Round Earth Capital. "The viability of the company is definitely in question."
Another high-profile analyst agrees. Dougie Youngson of London's Arbuthnot Securities said investors who think BP's selloff is overdone could be gravely mistaken. The company has "the real smell of death," he said a few days ago.
The U.S. court system
The optimists note that the infamous Exxon Valdez oil spill in 1989, which dumped more than 40 million litres of crude into Alaska's pristine Prince William Sound, ultimately did little financial damage to Exxon. The company paid about $2-billion cleaning up the spill and about $1-billion to settle criminal and civil charges. The hassle factor - Exxon spent almost two decades in litigation - seemed the biggest problem. Today, Exxon is the world's largest oil company, by stock market value, and is considered a model operator.
The pessimists argue that BP's size, wealth, lobbying and legal power may do little to protect it. They note that no company can control the vicissitudes of the U.S. federal and state courts, where perfectly healthy companies can get eaten alive. Big oil companies are no exception, even though they, like car makers and defence contractors, generally enjoy the red carpet treatment in Washington's power corridors.