BP Sets Up $20 Billion Fund, Suspends Dividend
Just as I suspected in an earlier post (BP Stock) BP will put aside only one year’s income to pay for the damage in the Gulf.
How it Works
BP’s emergency fund will be collected over the next four years, with $5 billion going into the fund each year. BP, in an agreement with the Obama Administration, will also set up a $100 million fund to pay for oil workers who have been out of work since the explosion of the Deepwater Horizon driller.
BUY BUY BUY
It couldn’t be more clear. With four years to amortize the costs of the spill, and with a $20 billion fund most believe should be sufficient, BP has exited this hellacious event with nothing more than a slap on the wrist. $20 billion is roughly it’s annual income, and seeing as though the dividend will be suspended to pay for the disaster, what you’re getting is an excellent company at half-price. Now at $32 a share, BP is off more than 50%, even though only 1 year’s income (obviously not half of all it’s future income) is being wiped away.
I agree. They will thrive in the future.