BP shares move higher ahead of Gulf report

[September 08, 2010]  LONDON (AP) -- Shares in BP PLC moved higher on Wednesday ahead of the release of the company's internal report on the disastrous oil spill in the Gulf of Mexico and after a credit ratings agency upgrade.

The stock had opened the London session lower, but was trading up 1.1 percent at 411.45 pence ($6.35) by midmorning amid expectations that the report would place responsibility on Swiss-based Transocean and U.S. company Halliburton as well as pointing the finger at BP.

A decision by London-based Fitch Ratings agency to upgrade BP to an 'A' rating from 'BBB' added to the positive sentiment.

BP is due to publish its report at midday (1100 GMT) into the events leading up to the April 20 explosion on the Deepwater Horizon rig that killed 11 workers and started off the worst oil spill in U.S. history.

Analysts expect the company to admit that it was partly to blame, but also to lay charges at the doors of Transocean, which owned the rig, and Halliburton, which was contracted to cement the busted Macondo wellhead into the sea floor.

All three companies have already blamed each other for failings in hearings before U.S. Congress in May.

"We believe (the report) could shift the focus of culpability back towards Transocean and in particular the integrity of the Blowout Preventer which should have acted as the ultimate fail safe," analysts at Evolution Securities said in a research note. "If our view is correct then BP's shares could rally this afternoon as expectations of gross negligence litigation is eroded."

Meanwhile, Fitch Ratings said its upgrade reflected an end to the threat of further leaks from the Macondo well, the improved visibility of potential liability scenarios the company could still face and substantial progress made in building up liquidity to meet those potential costs.

BP has increased its committed standby credit lines to around $17 billion from $5 billion and has announced $10 billion of a planned $30 billion in asset sales over the next 18 months.

"Fitch notes that BP's liquidity trebled since June following dramatic short-term progress on asset disposals," the ratings agency said, adding its outlook for the company was "stable."

"BP's credit metrics remain robust, and the company does not necessarily need additional borrowings to meet anticipated liabilities given cash inflow provided from asset sales and organic cash flow generation in the current oil price environment," it added.

[Associated Press]

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