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发帖数: 675 | 1 BP Disaster: What Investors Need to Know
The whole nation is watching the unfolding disaster in the Gulf in disbelief
. It's hardly a surprise that BP stock plunged again Tuesday. But panicking
never helped anybody, investors included. With so much of the coverage now
gripped by hysteria, it's time to look at some cold facts.
Here are the numbers that investors need to know.
First, what cost is Wall Street putting on the disaster?
Despite the total focus on BP, four other companies were closely involved in
the Deepwater Horizon well: Anadarko Petroleum, its minority partner,
Transocean, which operated the rig, Halliburton, which was responsible for
cementing the well, and Cameron International, whose blowout preventer
failed. Shares of all five companies have slumped since the April 20
explosion. In total about $111 billion has been wiped off the value of their
equity–most of that from BP. But some of these losses are simply due to
the stock market downturn: Over the same period the S&P Global Energy Sector
has fallen 15%. If we assume the "Deepwater Five" would have seen their
shares fall by a similar amount anyway, the extra decline–presumably due to
the disaster–totals about $66 billion
Second: Is that a reasonable estimate of the likely cost? Is it too little?
Too much?
Before this, the worst oil disaster in history was the Exxon Valdez spill of
1989. As noted here previously, Exxon ended up paying about $7 billion in
today's money as a result. Will this disaster end up costing nine times as
much as Valdez, in inflation-adjusted terms?
One major difference is the impact on local economies. The fisheries of the
Louisiana and Mississippi coasts have been devastated. So too, for some time
, has some of the local tourist business. But how big are they?
According to the Commerce Department, "forestry, fishing and related
activities" for the entire state of Louisiana accounted for about $613
million in economic output in 2007, the last year for which numbers are
available. For Mississippi it was $609 million, bringing the total to $1.2
billion. That includes forestry–much of it, presumably, inland. But let's
assume it's all completely wiped out for now. Cost: $1.2 billion a year.
Arts, entertainment and recreation for the two states was worth another $3.7
billion, most of it in Louisiana. The impact of the Deepwater oil slick is
harder to measure here. Presumably it will not stop the New Orleans Saints
from playing, nor will it shut cinemas across the two states. If the Gulf
spill halves all arts, entertainment and recreation activity in both states
–an incredible assumption, but let's be ultra-conservative–that will cost
about $1.9 billion a year.
Then there's the cost to the rest of the tourist business. According to the
Commerce Department, the total sales of all the restaurants and hotels in
both states, from a French Quarter eatery to a local diner in northern
Mississippi, came to about $9.1 billion in 2007. Let's assume they won't all
be closed down. Let's further assume that some of the hotels and
restaurants on the Gulf are doing a brisk business right now from all the
people down there to cover, monitor or work on the spill. (It would be
interesting to know how much the media folk are spending in the local bars,
restaurants and hotels on their expense accounts–and how that compares with
the usual take around this time of year.) But once again let's assume the
entire restaurant and hotel business across both states loses half its
business from this. That's another $4.5 billion a year.
Total cost from all three: $7.6 billion a year.
If we further assume the other costs–including fines, cleanup and so on–
come to, say, double those related to Exxon Valdez, that would be another $
14 billion.
There are further unknowns, of course. The damage may spread to other states
as well. But based on these numbers, it's a challenge to put a $66 billion
total cost on the spill. Not impossible, but a challenge.
And if this disaster leads to much tighter restrictions on deep-water oil
drilling, that will prove a mixed curse for the industry, including BP.
After all, presumably that would restrict supply. All things being equal,
that should lead to higher oil prices
In the panic today, BP's bonds have also crashed. Credit markets started
pricing in some risk that BP could default, and the interest rate on the
bonds rocketed to 1.8 percentage points above "risk-free" government paper.
Once again, it's a challenge to see this through cold math. BP came into
this crisis with a solid, well-managed balance sheet. While it carries debt,
like any major company, it was minor. As of the end of March it had $86
billion in current liabilities and long-term debt, compared to $70 billion
in current assets such as cash and inventories. Operating income was $22
billion last year. Interest expense was about $700 million. BP's dividends
alone come to about $10.6 billion a year. (The company, incidentally, could
do itself a huge public relations favor by suspending all dividends until
further notice).
As an investor, what are your choices?
BP stock, which was $60 before the explosion about six weeks ago, is down to
$38 now. These are lows last seen during the depths of the 2002-3 and 2008-
9 financial crises. The dividend yield is nearly 8%.
No one knows when or how this disaster is going to end. As noted some weeks
ago, anyone buying BP stock in this environment is taking a gamble: The
stock looks cheap, but the risks are unknown and ultimately not measurable.
And even if your gamble is proven right in the end, you will need nerves of
absolute steel to hang on for the ride.
I'd rather bet on the options. At least your losses are capped. Options give
you the right to buy the shares at a fixed price, but no obligation. So if
the shares recover you can make a profit but if they continue to slump you
only lose the small stake you paid for the options. For example $40 call
options good until January 2012 are now just $6.75 per share. Those give you
the right to buy the shares for $40 at any point over the next 19 months.
The $45 options, giving you even more leverage are $5.45. (Options sell in
round lots of 100).
Caveat emptor, as always.
Corrections & Amplifications
Forty-dollar call options on BP shares for January 2012 are now $6.75 a
share. The $45 options are $5.45. An earlier version of this column
incorrectly gave the June 2010 prices for those options, which are $1.50 and
$.32, respectively.
Write to Brett Arends at b**********[email protected] | e*n
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【在 f*****x 的大作中提到】
: BP Disaster: What Investors Need to Know
:
: The whole nation is watching the unfolding disaster in the Gulf in disbelief
: . It's hardly a surprise that BP stock plunged again Tuesday. But panicking
: never helped anybody, investors included. With so much of the coverage now
: gripped by hysteria, it's time to look at some cold facts.
: Here are the numbers that investors need to know.
: First, what cost is Wall Street putting on the disaster?
: Despite the total focus on BP, four other companies were closely involved in
: the Deepwater Horizon well: Anadarko Petroleum, its minority partner,
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