BP WATCH: BP's US Shares Sink To 14-Year Low

By Donna Kardos Yesalavich Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--BP PLC's (BP, BP.LN) shares fell in the U.S. and London Thursday, with its U.S. shares hitting a fresh 14-year low as investors continued to fret over the uncertainty surrounding the oil giant's liability and containment efforts for the Gulf of Mexico oil spill. BP's American depositary shares were recently down 3.6% at $28.61 after hitting an intraday low at $28.56, the stock's lowest point since Aug. 9, 1996. The U.S. shares are below their per-share book value of $33.25, with its price-to-book value at 0.88. The stock is now down some 53% from where it closed April 20, the day the Deepwater Explosion rig exploded. In London, the stock closed 2.5% lower. Options activity was muted compared with recent days, with slightly more volume in puts, which convey the right to sell, than in calls, which convey the right to buy. Meanwhile, the cost to insure BP's bonds fell modestly from Wednesday but remained elevated, according to data from Markit. The action came as BP said oil-collection efforts dropped on Wednesday after the company spent much of the day reinstalling a containment cap on the leaking well. BP collected 16,830 barrels of oil, down nearly 40% from the day before. Earlier on Wednesday, a robot submarine collided with the containment cap, jostling it loose and forcing the company to halt the flow of oil up to the Deepwater Enterprise rig on the surface. The federal government estimates that anywhere from 35,000 to 60,000 barrels a day are escaping into the Gulf. Meanwhile, the Coast Guard is working with the oil industry on contingency plans in case more oil begins spilling from a new leak, or if a storm disrupts containment efforts on the surface. Oil companies are considering a plan to divert oil to nearby platforms and pipelines, U.S. Coast Guard Admiral Thad Allen said Tuesday. The efforts for contingency plans come as the first major storm since the oil spill began may reach the Gulf of Mexico as early as next week. The tropical wave over the western Caribbean Sea hasn't increased in strength, the National Hurricane Center reported Thursday, but the odds of the tropical disturbance developing into a tropical cyclone during the next 48 hours rose to 40% Thursday. Wednesday, the odds were at 30%. Andrew Fitzpatrick, director of investments at Hinsdale Associates, said the firm has reduced some of its clients' positions in BP since the oil spill, but BP holdings remain for other clients willing to take on the risk and keep the stock for the long term. "There's a good amount of risk there just because of the uncertainties and the amount of liabilities is really unknown, so I've been trimming the positions for some clients," Fitzpatrick said. "Ultimately, I think that if you do have the risk tolerance and some time, that the stock will be fine. So I think for the right investor and for someone not dependent on the dividend and not with a real short time horizon, I'm holding the stock and I think it will be OK." Meanwhile, Joseph Battipaglia, chief market strategist of the private-client group at Stifel Nicolaus, said BP is a stock he doesn't want to go anywhere near in the short term. "We have not owned the stock going into this, so we had the luxury of thinking clearly about whether or not to buy it. Our conclusion is we would not buy it," Battipaglia said. "That's based upon the wide range of possible outcomes there that have equal weight in probability. The uncertainty is extremely high." Battipaglia added, "What we can go on in the short term is the fact that this company clearly is going to put its stakeholders second to the community at large in the Gulf and to the whim of the U.S. government. I think you're better served going elsewhere and avoiding BP if you want to own" shares in the energy sector. -By Donna Kardos Yesalavich, Dow Jones Newswires; 212-416-2188; donna.yesalavich@dowjones.com (Brian Baskin contributed to this article.) (END) Dow Jones Newswires June 24, 2010 15:43 ET (19:43 GMT)