BP WATCH: BP's Shares Fall As Anadarko's Warning Weighs

By Donna Kardos Yesalavich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--BP PLC's (BP) shares fell in the U.S. and London Monday after Anadarko Petroleum Corp. (APC) said it plans to refuse to pay its share of the clean-up costs for the Gulf of Mexico oil spill, while the costs for the spill response reached $2 billion. BP's American depositary shares were down 4.4% to $30.34 in recent trading, coming closer to retesting the 52-week low of $29 they reached earlier this month. The shares are now off nearly 50% from where they closed April 20, when the Deepwater Horizon rig exploded. Options activity in BP was elevated, although it appeared to be fairly even between bearish and bullish bets. Meanwhile, the cost to insure BP's debt remained close to its Friday level. In London, BP's stock closed 2.2% lower. The declines in the shares came as investors grew more concerned about the potential extent of BP's liabilities for the oil spill. The oil giant said Monday morning that costs for the spill response had reached $2 billion as it continues work to contain the leak and to pay claims for damages. To date, more than 65,000 claims have been submitted and more than 32,000 payments made, totaling about $105 million, BP said. "It is too early to quantify other potential costs and liabilities associated with the incident," the company said in a statement. On Friday, Anadarko Chairman and Chief Executive Jim Hackett said "BP's behavior and actions likely represent gross negligence or willful misconduct," which if proved could mean its partners in the well aren't liable for their share of the soaring oil spill costs. Anadarko's shares rose 1.3% in recent trading. Oppenheimer cut its 12-to-18-month price target on BP to $45 from $55 following Anadarko's statement. "BP faces record cleanup costs and financial liabilities that are very difficult, if not impossible, to estimate with a high level of certainty," the firm warned in a note to clients. However, Oppenheimer still has an outperform investment rating on the stock under the belief that "upside potential from current price levels is significantly greater than any further downside risk from the oil spill." Last week, BP agreed to cut its dividend and set aside $20 billion for a claims-paying fund, moves that calmed investors' worries as they removed a bit of the uncertainty over the company. However, other uncertainties remain and continue to weigh on the stock. "Over the short term, we're not touching it with a 10-foot pole," said Mike Tosaw, investment adviser representative of Know Your Options Inc. Tosaw said he expects BP will hold up over the long term. Still, he said, "I personally am not putting my money where my mouth is on that. There's just too much uncertainty with it." Tosaw said one of the biggest reasons he wants to stay away from the stock is because of the expected volatility implied by options traders' recent bets. The recent activity in BP options indicates traders are expecting the stock to move nearly $12 up or down. "That much of a range, at least at this point, that scares me away from it," Tosaw said. "When volatility's high, volatility's high for a reason. For a long-term client, I just wouldn't feel comfortable with that one." Even so, J.P. Morgan Cazenove's Fred Lucas sees value in BP's shares. The analyst pointed to 11 "triggers" that could put the oil major in position to reach his lowered price target--an objective implying potential upside of about 43% from current levels for BP's London-traded shares. -By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; donna.yesalavich@dowjones.com (Cynthia Lin contributed to this article.) (END) Dow Jones Newswires June 21, 2010 14:54 ET (18:54 GMT)