BP Gains as CEO Survives Congressional Attacks

BP

held early gains this morning, a day after CEO Tony Hayward survived a U.S. congressional grilling. Shares were up over 1% in early trading today, even as Moody's Investor Service handed BP its third ratings downgrade in a week. BP's stock has been battered since the April 20 Deepwater Horizon accident. The oil spill, which is the worst in U.S. history, has reduced BP's market capitalization by almost half. While a majority of analysts maintain "Buy" or "Hold" ratings on the stock because of its cheap valuation relative to assets, the company has made little progress in reassuring the U.S. public that it can contain and clean the spill. The establishment of a $20 billion compensation fund has buoyed the stock somewhat, but many analysts speculate that the amount will pale in comparison to the final costs - whether criminal or civil. Based on a Goldman Sachs estimate, the figure could surpass $100 billion if cleanup and reimbursement costs continue to escalate. While there is little speculation that BP will enter bankruptcy anytime soon (BP posted a $17 billion profit last year), creditors are demanding higher interest. Shareholders are sure to feel anxiety in the coming weeks as better estimates of total costs come to light.