with the ramifications of this disaster will be. Many news agencies are reporting that clean up is costing BP about 0 million per day and that total costs have now surpassed billion. Yet, until the oil flow stops and the damage is surveyed, it will be difficult to know how much money BP will lose as a result.
Does this mean that investing in BP’s stock is a poor decision? Not necessarily. Assuming that the stock was fairly priced prior to the disaster, it seems very unlikely that BP will incur costs nearing the 0 billion market capitalization loss. As well, BP generates about billion in operating cash flow annually, which should allow it to cover ongoing clean up costs and make it easier for the company to raise additional funds they need through loans or equity sales. One caveat is that BP may be forced to cut its dividend in order to cover clean up costs. Perhaps this is already priced into the stock, but it is likely that the share price will fall if and when a