We should all feel terrible for BP (wink, wink). The oil giant is reporting this week that its quarterly profits fell 66 percent, to a paltry $1.79 billion, down from $5.34 billion in the same period a year earlier. The real news here is that BP is already back to making a big profit – even though the spill continues to bankrupt families and businesses across the Gulf Coast.
The New York Times reports that BP “…has pushed ahead with selling $30 billion in assets to help pay for costs related to the oil spill. BP said Tuesday the sales program was ‘making good progress.'”
BP is also claiming to have already set aside $32.2 billion in the second quarter to cover spill-related costs. Meanwhile, the company reports about $13 billion of cash on hand, and its stock price is down only one-third from pre-spill levels. Good progress, indeed – we can only hope and pray the Gulf Coast economy rebounds that quickly.
Since any information from BP should be subjected to the highest levels of skepticism, I’ll say that these much-lamented figures are designed to create a climate for resuming the payment of dividends. That’s an important political issue in the UK – and by trumpeting the lesser profits and set-asides and sell-offs – the company can create an environment to get its corporate life back.
Without that sort of advance work, it might be difficult to start paying its owners without first paying its victims. And let’s remember that the $20 billion BP fund being run by Kenneth Feinberg is an ongoing process – the big money will come with government fines and when BP has to start paying back state and local governments for their spill costs.
My guess is that we’ll see a serious dividend-payments trial balloon, most likely from London, in the coming weeks.
Read between the lines of the NYT story by Julia Werdigier here: http://www.nytimes.com/2010/11/03/business/global/03bp.html?_r=1
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