At a Glance: BP Execs Meet with Obama Administration
(Dow Jones Newswires), June 16, 2010
BP Chairman Carl-Henric Svanberg, Chief Executive Tony Hayward and other company executives are meeting with President Barack Obama and Vice President Joe Biden at the White House.
BP agreed to put about $20 billion in an independently administrated oil-spill escrow fund, according to sources. The White House is expected to name pay czar Kenneth Feinberg the fund's independent administrator.
The cost of insuring BP-issued debt set all-time highs following Obama's Oval Office speech Tuesday and several ratings downgrades.
A second BP containment system, the Q4000, has begun collecting oil. The vessel will enable BP to capture between 20,000 and 28,000 barrels of oil a day in total from the leaking well.
As the massive offshore oil spill continues to gush, BP executives and the Obama administration have agreed on the $20 billion, White House officials said. Obama had said that BP should establish a restitution fund with "whatever resources are required."
Talks continue regarding the administration's call for no ceiling on BP's liability if cleanup costs go higher. BP is pressing for some limits. Questions also remain about what the fund will cover and whether BP, whose stock has lost half its value since the April 20 spill, will be able to fund ongoing operations.
Feinberg, the person named to oversee the fund, previously handled compensation claims for 9/11 victims. He oversees executive compensation at the country's biggest financial firms.
The suspension of BP's dividend remains a likely topic of discussion.
In Tuesday's speech, Obama said that the gusher was coming under control and that BP would be capturing 90% of the flow "in the coming days and weeks."
But on Tuesday, scientists monitoring the damaged well raised their estimate of the amount of oil spilling into the Gulf to a range of 35,000 to 60,000 barrels a day from 20,000 to 40,000 barrels.
BP'S SECOND SYSTEM
BP said oil and gas from the second containment system reached the Q4000 early Wednesday. The company said it hopes to have two additional ships in place by the end of June that will bring the total volume of oil it can capture from the leaking well to between 40,000 and 53,000 barrels a day.
BP's stock price mostly rebounded from earlier lows in the U.S. but slid more in Europe. The company's American depositary shares recently declined 0.4% to $31.28, after dropping more than 4% earlier, but BP was off 1.5% in Europe.
The cost of insuring debt issued by BP reached an all-time high. BP's credit-default swaps were quoted at 620.3 basis points earlier Wednesday, according to CMA Datavision, meaning it now costs an average of $620,300 a year to insure $10 million of debt issued by the company. CDS are tradable, over-the-counter derivatives that function like a default insurance contract for corporate debt.
The cost of CDS is rising for BP partners Anadarko and Transocean. Anadarko's CDS recently traded at 706 basis points, 20 basis points wider than Tuesday's close; Transocean's CDS was 30 basis points wider at 649.
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