Financial news magazine Barron's is bullish on BP, Europe's second-largest oil company, saying the worst appears to be behind the British oil giant and that shares may once again be worth a look. While BP's shares have rebounded since the Gulf of Mexico oil spill, they are still 25% below their 52-week high.
BP (BP) could benefit from a presidential commission's report that said BP was not the only company at fault for the Gulf spill, the largest in U.S. history. As a result, the chances that BP will be convicted of gross negligence by the Justice Department have been significantly reduced, Barron's reported.
BP has already set aside $40 billion to cover spill-related costs, but the $20 billion used for the victim's compensation fund may prove to be too much as the fund's administrator, Kenneth Feinberg, recently said only $10 billion may be necessary to pay all claims.
BP suspended its dividend following the spill and could partially restore it this year, but it is unlikely the payout will immediately return to pre-spill levels. The cash savings will allow the company to spend more on exploration and production projects, according to Barron's.
In a research note, Evolution Securities says that a rise in oil prices from $70 a barrel to $95 increases BP's cash flow from operations by an estimated $11 billion, Barron's reported.