BP Puzzled by Big Drop in Stock Price
BP said in a statement: "The company is not aware of any reason which justifies this share price movement."
The oil company also defended its financial health as reports surfaced questioning whether the company would have to file for bankruptcy. The company contends that it will be able to withstand the costs of the Deepwater Horizon disaster and stated, "BP faces this situation as a strong company. In March, we indicated that the company's cash inflows and outflows were balanced at an oil price of around $60/barrel. This was before the costs of the incident."
BP bolstered its position by adding:
Shareholders are already taking action as the stock remains well off its high. A class-action lawsuit filed Thursday claims that "BP violated the Securities Exchange Act of 1934 by issuing false and misleading statements about safety, technology, inspections and precautions at its offshore oil facilities."Under the current trading environment, we are generating significant additional cash flow. In addition, our gearing is currently below the bottom of our targeted range. Our asset base is strong and valuable, with more than 18 billion barrels of proved reserves and 63 billion barrels of resources as at the end of 2009. All of the above gives us significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims.
According to MarketWatch,BP's "credit-default swaps ballooned on Thursday to junk level status, despite the oil giant being rated AA by rating agencies. According to data from Markit, BP swaps widened to 570 basis points, up 195 points from Wednesday."
BP shares turned around Thursday morning. In premarket trading, the stock rose more than 11%.