BP Share News (BP.)

By Donna Kardos Yesalavich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Shares of BP PLC (BP) jumped in the U.S. and London Monday as investors grew hopeful that an expected change at the company's helm could mean it believes it truly turned the corner in its spill-killing efforts. BP's American depositary shares were up 4.1% to $38.37 in recent trading, having climbed nearly 45% from the 14-year low they sank to last month. The stock has now recovered 35% of its tumble from April 20, the day the Deepwater Horizon rig exploded, to the June low. In the U.K., BP's shares closed 4.6% higher. The gains followed reports that BP's board is negotiating the departure of its embattled chief executive, Tony Hayward. The BP board is expected to meet Monday to discuss and approve Hayward's departure, with Managing Director Robert Dudley seen as the likely successor. Investors are anticipating news of such a shuffling to be announced Tuesday, when BP releases its second-quarter results. Investors said if Hayward is removed, that alone wouldn't necessarily change the oil giant's valuation. Still, they speculated that if the company is making such a move now, that might mean BP is thinking the worst is behind it regarding the oil spill. The belief is that BP wouldn't change its CEO unless it thought the risk of negative events that could mar the new CEO's image was unlikely. "If BP is willing to make the switch of the CEO, then that likely means they have high confidence they've got it contained," said Mike Shinnick, portfolio manager of the Wasatch-1st Source Long/Short Fund. In turn, while investors had been thinking Hayward would be removed from the CEO post at some point, many hadn't been expecting such a move to come quite yet. "We were anticipating this change, but later on this year, when the Macondo well is definitively killed," analysts at Cheuvreux Credit Agricole told clients Monday. The firm added, "We believe this change will probably help BP to restore its reputation and credibility in the U.S.," noting that Dudley is not only "an American, but he also hails from the region devastated by the oil spill." In the credit default swaps market, the annual cost of buying protection against default on $10 million in BP debt over a five-year period fell Monday to $335,000, down from $349,000 on Friday, according to Markit. Options activity was mixed, with investors picking up 58,000 calls, compared with 59,000 puts, according to Track Data. James Dailey, chief investment officer at TEAM Financial Asset Management, said the chatter that Hayward might be removed appeared to push some investors who had bearish bets on the stock to cover those bets. Still, he doesn't see a CEO change as removing the major risks from the stock. "The short sellers that have been squeezed mercilessly in the last two weeks with this stock, and news like that could be enough to push them over the edge and cover," Dailey said. "I don't see how any kind of real buyers of the stock would [come in] based on Hayward leaving." Dailey said he has been "in and out" of the stock in recent months with bullish and bearish bets alike as he tried to take advantage of its short-term fluctuations. He now has a small put position, which conveys the right to sell shares, although he wouldn't exercise it unless the shares climb into the low $40 range. "There could be some upside until the low $40s," he added. "At that point, there might be enough priced in optimistically." Wasatch's Shinnick said regardless of who BP's CEO is, he has no interest in the company's shares due to concerns over the company's ultimate costs related to the spill. "I think we're getting closer to certainty on the containment of the spill... but it seems like what ultimately the company has to pay is very much up to courts for years and years," Shinnick said. "It just doesn't matter who's CEO to have that play out." -By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; donna.yesalavich@dowjones.com (END) Dow Jones Newswires July 26, 2010 14:06 ET (18:06 GMT)