BP shares drop as much as 17 per cent

VENICE, La./LONDON – BP faced a grim future on Tuesday as its ongoing failure to stop a Gulf of Mexico oil spill prompted a plunge in the energy giant’s shares and the possibility of a criminal probe by the Obama administration gained strength.

President Barack Obama, struggling to get on top of the worst oil spill in US history, vowed an overhaul of US laws and regulations needed to prevent a repeat of the April 20 rig explosion that killed 11 people and triggered the spill.And after meeting co-chairs of a commission that will investigate the accident, Obama raised the prospect of criminal prosecutions as US Attorney General Eric Holder visited the region and BP began a new strategy to end the six-week-old drama.The oil giant’s shares fell by as much as 17 per cent in London on Tuesday before ending down 13 per cent, at 430 pence. Later in New York, the American Depositary Receipts lost nearly 14 per cent, to 37, by late-afternoon.The shares were hit hard by weekend news that its latest attempt to plug its blown-out seabed well had not worked, sparking fears oil could leak into the Gulf until August.The shares have lost more than a third of their value, or about 46 billion pounds (US$67 billion), since the leak started. The cost of dealing with the crisis now totals US$990 million, and is rising.Shares of other companies with stakes in the well were also down between 10 and 17 per cent, including Anadarko, Transocean, Cameron and Halliburton.At the same time, the cost of protecting the debt of what was once Britain’s biggest company against default rose sharply, as the five-year BP credit default swap widened by 71 basis points to 173 basis points, CDS monitor Markit said.The cost to protect Anadarko, Transocean and Halliburton debt also soared.GLOOM OUTLOOKAnalysts were increasingly gloomy about BP as an investment, with one issuing a sell order and saying he thinks the company will be broken by the crisis.A poll by CNBC, a Wall Street news channel watched by many savvy US investors, said that 63 per cent of those surveyed say BP will be fine in a year, while 25 per cent believe the company will be under bankruptcy protection and 12 per cent thought BP would go under.But the White House said BP had the resources to cover the financial costs of the disaster.’You’ve got a company with the type of market capitalisation that can and will fully pay for the damage caused by the disaster they are responsible for,’ spokesman Robert Gibbs said when asked at a briefing if the Obama administration was concerned BP could be financially ruined by the spill.The fate of BP’s shares weighed on investors but was of little concern to residents of Louisiana’s coast half a world away, who have suffered crippling losses because of the closure of some Gulf waters to fishing. – Nampa-Reuters