BP's Oil Spill Costs May Be Up to $33 Billion

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The oil spill in the Gulf of Mexico is taking a bigger bite out of BP's (BP) bottom line, according to a report issued Wednesday that hikes the oil company's cost to $33 billion. Analysts for financial research firm Sanford C. Bernstein & Co. said increased flow rates from the leak are adding to the costs, which include clean-up expenses and payouts to damaged businesses. So far, BP has spent $3 billion on clean-up, and it has set aside a $20 billion fund at the behest of the U.S. government.

Despite the escalating cost, the report said there's little chance that the company's U.S. division will be bankrupted. Still, the rising expense is taking its toll on the company. "We think it likely BP will experience a slight recovery as the leak is stopped," the London-based analysts wrote. "After that, however, we remain skeptical on the long-term prospects for BP."

The company's U.S. stock Wednesday rose nearly 4%, or $1, to finish at $32.95. The shares have lost half of their value from their high right before the Deepwater Horizon offshore rig exploded and began spewing an estimated 60,000 barrels of oil a day into the Gulf. Wednesday's stock-price increase came on news that the company is making progress with its relief wells.
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