BP: An Exxon Takeover or Asset Sale?
Speculation has increased in the last two days that BP's options to cover its costs are narrowing. The firm may sell debt or equity to investors in the Middle East. It could borrow money from banks or make a public offering of debt. The company could also raise money through a public stock offering.
The Exxon rumor seems improbable. The world's largest oil company would have to take on massive liabilities. Even with Exxon's balance sheet and cash flow, this would be an extraordinary risk. The Apache rumor, on the other hand, sounds more likely. The value of BP's assets near the Arctic are easier to establish and can be separated from the liabilities related to Gulf disaster.
BP's shares moved up sharply on the Exxon rumor. The market clearly believes that something will happen soon as the damage to BP grows.