In an initial phase of testing, BP Plc (BP) has successfully checked the leakage at its Deepwater Horizon rig that exploded and sank in April. The sealing of the leakage comes as a much-awaited milestone in controlling one of the nation’s worst environmental disasters.
On Thursday afternoon, the company finally conducted a test to seal the leakage under which it placed a new cap on top of the affected well and finally stopped the oil flow. The cap can accumulate up to 80,000 barrels per day and hence stands as a crucial step toward a multi-vessel oil-capture system that is hurricane-proof. According to a U.S. government-led panel of scientists, the well was erupting 35,000 to 60,000 barrels of oil a day.
The test is to measure the ability of the well to withstand pressure, and may continue from six hours to two days.
Despite the initial success, BP is still a long way from sealing off the well permanently. The company has to conduct further tests in order to ensure that the cap is capable of holding the oil without blowing a new leak in the well.
After hitting a low of $26.75 in late June, BP’s American depositary shares revamped 7.6% to $38.92, the highest since June 4, after the oil giant announced that it successfully stopped the flow of oil into the Gulf of Mexico (GoM) region from its well. Moreover, news that Apache Corp. (APA) will purchase approximately $10 billion worth of assets from BP also excited the market.
The companies, affected by the disaster, were also relieved by the announcement. The shares of Anadarko Petroleum Corp. (APC), which owns a 25% interest in the well, upped 3.2% to $49.08, with Transocean Ltd. (RIG), the owner of the rig, climbing 4.5% to $54.70.
The seal comes as good news for the oil major, particularly after its share value plunged dramatically following the explosion. The aftermath of the disaster also included several steps by lawmakers such as banning it from new offshore exploration leases or earning royalties on the oil it was collecting from Macondo well. Moreover, the oil spill had triggered off concerns not only at BP, but also in the entire oil industry, the GoM, on government policies as well as U.S. politics.
BP is incurring huge costs that significantly overshadow most of the company’s recent positives and is still a long way from finally sealing the leakage. However, we consider the first successful attempt as a positive for the company and believe that it will eventually retain its fundamental position. Hence, our Neutral recommendation on the stock remains unchanged.
On Thursday afternoon, the company finally conducted a test to seal the leakage under which it placed a new cap on top of the affected well and finally stopped the oil flow. The cap can accumulate up to 80,000 barrels per day and hence stands as a crucial step toward a multi-vessel oil-capture system that is hurricane-proof. According to a U.S. government-led panel of scientists, the well was erupting 35,000 to 60,000 barrels of oil a day.
The test is to measure the ability of the well to withstand pressure, and may continue from six hours to two days.
Despite the initial success, BP is still a long way from sealing off the well permanently. The company has to conduct further tests in order to ensure that the cap is capable of holding the oil without blowing a new leak in the well.
After hitting a low of $26.75 in late June, BP’s American depositary shares revamped 7.6% to $38.92, the highest since June 4, after the oil giant announced that it successfully stopped the flow of oil into the Gulf of Mexico (GoM) region from its well. Moreover, news that Apache Corp. (APA) will purchase approximately $10 billion worth of assets from BP also excited the market.
The companies, affected by the disaster, were also relieved by the announcement. The shares of Anadarko Petroleum Corp. (APC), which owns a 25% interest in the well, upped 3.2% to $49.08, with Transocean Ltd. (RIG), the owner of the rig, climbing 4.5% to $54.70.
The seal comes as good news for the oil major, particularly after its share value plunged dramatically following the explosion. The aftermath of the disaster also included several steps by lawmakers such as banning it from new offshore exploration leases or earning royalties on the oil it was collecting from Macondo well. Moreover, the oil spill had triggered off concerns not only at BP, but also in the entire oil industry, the GoM, on government policies as well as U.S. politics.
BP is incurring huge costs that significantly overshadow most of the company’s recent positives and is still a long way from finally sealing the leakage. However, we consider the first successful attempt as a positive for the company and believe that it will eventually retain its fundamental position. Hence, our Neutral recommendation on the stock remains unchanged.
Read the full analyst report on “BP”
Read the full analyst report on “APC”
Read the full analyst report on “RIG”
Read the full analyst report on “APA”
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