Subscribe to the BlogThe British Petroleum company boasted of generating over 10 billion dollars of cash every year and also indicated that it would keep growing at a healthy pace in the future. But all that changed with a single accident in the Gulf of Mexico.
The oil rig blast on April 20th has changed the fortunes of the company in a matter of weeks, only because the oil spill was continuing unabated at over 25000 barrels per day, and the company had no immediate solution to the problem.
So the company has already paid over three billion dollars and another ten billion dollars are planned to be paid over the next few months to take care of compensation and containment costs. Environmental restoration costs would be following later and that would be easily two to four billion dollars.
The company is already out of all the cash balance and it is on the verge of selling some prime assets worth ten billion dollars in order to avert a throw-away price takeover by some US company.
The company indeed has a great legacy and we can expect it to put it into good use and come back with better performance in 2011 onwards. 2010 is definitely a very bad year for the otherwise glorious company.