BP at what price should we buy? Anyone waiting to load up?

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BP at what price should we buy? Anyone waiting to load up?

Postby kfed » 02 Jun 2010, 13:24

Thoughts my friends?

Is this a time to buy BP? Or will it be shortly?

Or sould we wait?
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Re: BP at what price should we buy? Anyone waiting to load

Postby Belgian Pie » 02 Jun 2010, 13:32

Wait ...
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Re: BP at what price should we buy? Anyone waiting to load

Postby kfed » 02 Jun 2010, 14:05

do you think it will get worse for this stock?

maybe the everyone jump in beat up feel good effect?

Or?

Long term I think it is naive to think anything will really hurt this company, but maybe I am wrong
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Re: BP at what price should we buy? Anyone waiting to load

Postby lbksig » 03 Jun 2010, 01:57

kfed wrote:do you think it will get worse for this stock?

maybe the everyone jump in beat up feel good effect?

Or?

Long term I think it is naive to think anything will really hurt this company, but maybe I am wrong


Yes it will get worse for the stock. The market knows fines and penalties (for the company) and possible jail time (for the corporate officers) are coming. The question on everyone's mind is how big will the fine be? The stock is off 20% since the fiasco started (but it still has a pretty decent yield of 8.99%). A big fine will tank the stock price. A small fine will piss off all the environmentalists, be politically unpopular and send the wrong message to "big business". My prediction is to prepare for a massive fine and a good buying opportunity.

Let's face it, it's an oil company. As long as the world runs on petroleum there will be oil companies and they will make profits. Lots of profit. Big profits that piss off certain constituencies and Congressional demigogues. The fine will be a drop in the bucket compared to the profits they will make if they can extract the billions of barrels of oil from the gulf. If not, the US will have to purchase more oil extracted from overseas. It will still be refined here so the oil companies will make their money.

With the middle class growing in China and India (and they all want cars) this is increasing demand. Supply is staying roughly the same in the short term so prices will increase. Short term in this case is 3 to 5 years as it takes time to find new oil fields, investigate their capacity, set up leases, get government ok, build the facility, extract and ship it. The easily extracted oil is running out, which is why they were drilling so deep in the gulf in the first place. Demand is increasing at a faster rate than supply can match it, the current Recession being an anomaly.

The alternatives, electric vehicles, aren't there yet and there's nothing to replace oil. Even if you replaced petroleum burning vehicles with electric, you have to worry about what's providing your electricity and how to charge them. China recently released a joint study between Tsinghua University and Argonne National Laboratory that while electric vehicles will decrease oil consumption but they'll be worse greenhouse gases polluters due to the source of the electricity (coal). The charging issue was covered in this popular mechanics article on the new Mitsubishi i-Miev. For it to charge the same number of cars per hour as a conventional gasoline station, it would need 67 quick charge stations compared to 8 gasoline pumps. It takes 3 minutes to fill a gas vehicles tank but 25 minutes to charge the battery to 100%. Ohh and it will take half an acre of land to handle all those charging stations.

Oil's not going anywhere for a while and British Petroleum will get slapped hard but will come back.
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Re: BP at what price should we buy? Anyone waiting to load

Postby Jaboney » 10 Jun 2010, 14:28

Hope you didn't buy (yet).
Washington Post wrote:It was a bad day for most stocks today, but it was a bloodbath for embattled oil giant BP.

Shares of BP dived 16 percent today, driving the stock price to below $30 per share, the worst drop on record for the company. The British energy giant closed at $29.20 per share. More ominously, investors and traders rushed to dump their BP shares: Trading of the stock occurred at four times normal volume today.

As a result, the asset-rich company is now trading for less than its book value, which is essentially all the assets it has -- oil fields, oil rigs and so forth -- minus intangible assets and liabilities.

In English, this means that investors and traders think that the company is now actually worth less than all the hard assets it owns. That's a confidence trade.

The company has now lost a staggering half of its value since the late-April explosion of the Deepwater Horizon rig and subsequent oil spill. You calculate a company's value -- called its market capitalization, or market cap -- by multiplying its stock price by the number of outstanding shares.

Today, BP is worth $91.4 billion. In mid-April, the company was worth $180 billion. Wow.
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Re: BP at what price should we buy? Anyone waiting to load

Postby Belgian Pie » 10 Jun 2010, 15:55

I said to wait ...
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Re: BP at what price should we buy? Anyone waiting to load

Postby headhonchoII » 10 Jun 2010, 16:03

Pity can't buy BP on the local exchange. Electric cars do have a big future, they will be charged at home mostly , not in converted gas stations. They will be the run about car for families, principal usage at 3 GBP for 100 miles. That's a huge saving.
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Re: BP at what price should we buy? Anyone waiting to load

Postby Josefus » 10 Jun 2010, 21:59

So it's down 50%.
Is NOW the time to buy?
They're still a solid company that isn't exactly in any danger of going out of business, right?
RIGHT?
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Re: BP at what price should we buy? Anyone waiting to load

Postby Enigma » 11 Jun 2010, 02:12

Discussions now are about the U.S. government declaring a "receivorship" status, which basically means that the U.S. declares the firm a bankrupt company. A good time to buy? Not in this decade. If the U.S. does this, which is highly likely, BP will be under controf the U.S. Bankruptcy Court or, (EDIT: "probaby")in this case, Congress, for many years to come. Will their stock rise to meet the conflict. I highly doubt it.
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Re: BP at what price should we buy? Anyone waiting to load

Postby lbksig » 11 Jun 2010, 04:34

Enigma wrote:Discussions now are about the U.S. government declaring a "receivorship" status, which basically means that the U.S. declares the firm a bankrupt company. A good time to buy? Not in this decade. If the U.S. does this, which is highly likely, BP will be under controf the U.S. Bankruptcy Court or, (EDIT: "probaby")in this case, Congress, for many years to come. Will their stock rise to meet the conflict. I highly doubt it.


Can you point to me any law that allows the US government to involuntarily put a company under receivership status when they aren't creditors, temporary or not? If BP went bankrupt, the U.S. Bankruptcy Court has the authority to install a receiver(or trustee or whatever you want to call the person), but that is as a result of judicial proceedings. Congress has nothing to do with that at all.

First either the company has to declare bankruptcy (voluntary) or the creditors can initiate bankruptcy proceedings (involuntary). The government can't do that for a private company, Robert Reich's desires aside. This isn't AIG or Chrysler where the government became the major creditor and could make changes and decide who was in charge.

I can't see how that wouldn't be a violation of "Due Process" under the 5th amendment. The Executive Branch can't take control of BP, by putting them under temporary receivership, without violating the rights of all the shareholders. It's tantamount to nationalizing BP, even if it's temporary.

BP's liability is limited to 75 million USD for losses to private parties as per the Oil Pollution Act of 1990. That's all they can be held liable for as long as the law is constitutional. They'll still have to pay every dime for cleanup and damages to natural resources, which will be Billions of USD.

Oil Pollution Act wrote:Title I, section 1006, provided that Federal trustees shall assess natural resource damages for natural resources under their trusteeship. Federal trustees may, upon request from a State or Indian tribe, assess damages to natural resources for them as well. Trustees shall develop and implement a plan for the restoration, rehabilitation, replacement, or acquisition of the equivalent of natural resources under their trusteeship.


I plan on purchasing BP stock, but not until I have a better idea what the penalties for the environmental damage are. They'll be hefty and drop the share price more. However BP isn't insolvent. They have plenty of assets and make Billions of USD a year. If their share price drops low enough, another oil company will purchase them (pending government approval). Maybe they'll file for bankruptcy. Regardless, we aren't getting off oil any time soon.
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