BP’s stock hits lowest since January 2003

BP plunged to the lowest price in seven years on London Stock Exchange, following growing U.S. anger over the company’s failure to stop the oil spill in the Gulf of Mexico.
BP’s stock fell 6.7% to 365.50 pence, which is the lowest closing price of BP shares since January 2003. It even fell to 345.15 pence during the day, which is the lowest in 13 years. The stock dropped 44% since April 20, when the Deepwater Horizon rig exploded, killing 11 workers and contaminating the ocean’s ecosystem to a very large extent.
The company’s market capitalization has gone down shedding more than $73 billion since the incident. Ironically the company’s bonds and credit-default swaps are also trading poorly following the incident. It seems as if BP no longer possesses its excellent investment-grade rating.
These are undoubtedly very difficult times for the company. The U.S. government will make sure that the company pays the full costs of the cleanup and all other damages. According to Standard Chartered Bank’s estimate, the company is liable to pay as high as $40 billion for the oil spill. However, high cash flows, low levels of debts and highly valuable assets enable the company to deal with such high costs of cleanup, environmental remediation and any sort of payments of the legitimate claims.