BP worth a punt?

[UncappedTag]

lowest in 18 years, surely long term recovery double your money potential?

[BliarOut]

I've been wondering about that too, so probably a dumb idea

[sinizter]

I would tend to agree with you regarding the potential. But I have no experience with this sort of stuff.

So must be a common theme - but not that many people putting their money where it matters.

[Dave_ITR]

Providing you're looking at long term I think they're worth a punt.

[limpsfield]

UncappedTag said:

lowest in 18 years, surely long term recovery double your money potential?

Biggest fall in 18 years, lowest price since March 09

[DonkeyApple]

Only worth a punt when the price is going back up.

At present, it's only going down, so it isn't.

First price leap will be when they shut the leak off. Then the price will pull back again as the decade of litigation and costing begins.

However, if the leak is finally shut off and the general consessus of the market is that BP will susrvive then as a long term buy it has to look very good.

Key price floor will be the value of it's assets on break up. That's a lot lower than where we are now.

[birdcage]

They are insured up to the eyeballs but any gains will be minimal I reckon, even if they 'bounce'

Unless of course you have a lot of shares. Banking shares probably a better bet still.

[quattrophenia]

maybe wait until they have settled the $bn law suits, and see if they ever manage to put a plug in that pipe.
But if the question's - will BP make a decent profit in a year or two, then I think it's worth a few shares.

[sinizter]

quattrophenia said:

maybe wait until they have settled the $bn law suits, and see if they ever manage to put a plug in that pipe.
But if the question's - will BP make a decent profit in a year or two, then I think it's worth a few shares.

As soon as they settle their lawsuits/debts/whatever, the share price will go up/down taking into account the risk at that point.

[Beardy10]

I think BP's estimate of $1bil cost is probably very low but these costs will be taken over many years...the Exxon Valdez litigation looks to have been ongoing til a couple of years ago. There will also be ongoing damage to BP's business (and every other oil company) in terms of the cost of extracting oil from similar wells in the future. Even if the cost is $5bil BP looks well capable of dealing with that.

However, none of these issues are crippling and we're talking about a company that has $7bil cash on the balance sheet and generates FCF of $10bil a year. Crucially (in my mind) a lot of these costs will be born over many, many years rather than in one lump sum this year.

So do I think it's worth a punt ? Yes
Is now the right time to buy ? Who knows!

The market seems to think there will be a dividend cut which I think would go down like a bucket of cold sick with shareholders...it's currently yielding nearly 9% for those of you interested in that.

I am going to buy some this week (probably 30% of what I would like to buy) and see what happens. It will be going into my pension.

[Lefty 200 Drams]

Beardy10 said:

I think BP's estimate of $1bil cost is probably very low but these costs will be taken over many years...the Exxon Valdez litigation looks to have been ongoing til a couple of years ago. There will also be ongoing damage to BP's business (and every other oil company) in terms of the cost of extracting oil from similar wells in the future. Even if the cost is $5bil BP looks well capable of dealing with that.

However, none of these issues are crippling and we're talking about a company that has $7bil cash on the balance sheet and generates FCF of $10bil a year. Crucially (in my mind) a lot of these costs will be born over many, many years rather than in one lump sum this year.

So do I think it's worth a punt ? Yes
Is now the right time to buy ? Who knows!

The market seems to think there will be a dividend cut which I think would go down like a bucket of cold sick with shareholders...it's currently yielding nearly 9% for those of you interested in that.

I am going to buy some this week (probably 30% of what I would like to buy) and see what happens. It will be going into my pension.

to all of that. IMHO.

[b16a2_VTi]

im new to buying shares and i fancy taking a punt.

HOWEVER ive NEVER bought any shares and dont fancy being fleeced in a boiler room scan....Therefore can anyone advise me where to buy etc....and assuming these are brookers/ company's any reviews etc would be most welcomed.

Thanks

[Lefty 200 Drams]

Speak to your bank...

[benyimin]

b16a2_VTi said:

im new to buying shares and i fancy taking a punt.

HOWEVER ive NEVER bought any shares and dont fancy being fleeced in a boiler room scan....Therefore can anyone advise me where to buy etc....and assuming these are brookers/ company's any reviews etc would be most welcomed.

Thanks

Selftrade has always been very good for me.....don't just take punts though, fastest way to lose money, do a bit of research first!!

[DonkeyApple]

Beardy10 said:

I think BP's estimate of $1bil cost is probably very low but these costs will be taken over many years...the Exxon Valdez litigation looks to have been ongoing til a couple of years ago. There will also be ongoing damage to BP's business (and every other oil company) in terms of the cost of extracting oil from similar wells in the future. Even if the cost is $5bil BP looks well capable of dealing with that.

However, none of these issues are crippling and we're talking about a company that has $7bil cash on the balance sheet and generates FCF of $10bil a year. Crucially (in my mind) a lot of these costs will be born over many, many years rather than in one lump sum this year.

So do I think it's worth a punt ? Yes
Is now the right time to buy ? Who knows!

The market seems to think there will be a dividend cut which I think would go down like a bucket of cold sick with shareholders...it's currently yielding nearly 9% for those of you interested in that.

I am going to buy some this week (probably 30% of what I would like to buy) and see what happens. It will be going into my pension.

Why buy this week? That doesn't make sense at all.

This is 100% an 'event' play. We are waiting for the 'event' which will trigger a short to medium term bounce. No logic at all in buying until that takes place.

Once that event has occured and the market has duly reacted then short term plays would close out and the long term plays will reduce exposure.

It's very text book this one and is a great play but not this week unless the 'event' happens. The event being the stopping of the leak.

[Great Pretender]

benyimin said:

b16a2_VTi said:

im new to buying shares and i fancy taking a punt.

HOWEVER ive NEVER bought any shares and dont fancy being fleeced in a boiler room scan....Therefore can anyone advise me where to buy etc....and assuming these are brookers/ company's any reviews etc would be most welcomed.

Thanks

Selftrade has always been very good for me.....don't just take punts though, fastest way to lose money, do a bit of research first!!

TD Waterhouse is a good one too. I signed up to it today.

[Beardy10]

DonkeyApple said:

Beardy10 said:

I think BP's estimate of $1bil cost is probably very low but these costs will be taken over many years...the Exxon Valdez litigation looks to have been ongoing til a couple of years ago. There will also be ongoing damage to BP's business (and every other oil company) in terms of the cost of extracting oil from similar wells in the future. Even if the cost is $5bil BP looks well capable of dealing with that.

However, none of these issues are crippling and we're talking about a company that has $7bil cash on the balance sheet and generates FCF of $10bil a year. Crucially (in my mind) a lot of these costs will be born over many, many years rather than in one lump sum this year.

So do I think it's worth a punt ? Yes
Is now the right time to buy ? Who knows!

The market seems to think there will be a dividend cut which I think would go down like a bucket of cold sick with shareholders...it's currently yielding nearly 9% for those of you interested in that.

I am going to buy some this week (probably 30% of what I would like to buy) and see what happens. It will be going into my pension.

Why buy this week? That doesn't make sense at all.

This is 100% an 'event' play. We are waiting for the 'event' which will trigger a short to medium term bounce. No logic at all in buying until that takes place.

Once that event has occured and the market has duly reacted then short term plays would close out and the long term plays will reduce exposure.

It's very text book this one and is a great play but not this week unless the 'event' happens. The event being the stopping of the leak.

Because on a 20 year view I think it's a stupidly cheap asset and I don't want to miss out. Plus if the "event" happens and they seal the well off this week (which I think has a low probability) the stock will be up 20 to 30% and won't touch the sides before you can buy it. If I am wrong I might get a chance to add more shares in the next month or even six months. I don't know when the bottom will be, if I was that good I'd have more cars than JK.

Think of it this way.....BP's market cap is down something like about a third or £40bil and the wildest estimates this thing may cost them $10 bil dollars ( ten times BP's estimate and lets not forget they have insurance) in total over several years. I just don't think that's right.

Here's a question for you.

Why do you think think is "text book" ?

[ringram]

GM Shares were the cheapest in decades before they went Chap11 too.
So were Northern Rock Shares before shareholders were wiped out by the government nationalisation...

Edited by ringram on Tuesday 1st June 23:17

[Beardy10]

ringram said:

GM Shares were the cheapest in decades before they went Chap11 too.
So were Northern Rock Shares before shareholders were wiped out by the government nationalisation...

Edited by ringram on Tuesday 1st June 23:17

I think you'll find most companies shares are very cheap before they file for Chapter 11, it generally doesn't happen overnight. Two years before GM went bust Ford were in a much worse situation except they got new management in who mortgaged every single asset they had (to put cash on the balance sheet) which saved their bacon when the st really hit the fan.

Northern Rock shareholders weren't wiped out by nationalisation.....they were wiped out by a short sighted business plan and bad management. Shareholders would have been wiped out regardless, nationalisation saved depositors. What they shouldn't have done is give the depositors all their money, they should have given them 90% and sent them a letter explaining that banks that pay high interest rates do so for a reason and there is a risk involved.

Frankly if you bought shares in either of them you were a mug.

[NoelWatson]

ringram said:

GM Shares were the cheapest in decades before they went Chap11 too.
So were Northern Rock Shares before shareholders were wiped out by the government nationalisation...

Edited by ringram on Tuesday 1st June 23:17

Not sure of the relevance to BP?