Quote:
Originally Posted by RummyBoy
Dont forget one risk factors.... no-one knows the actual cost. Also, if the global economy double dibs, oil prices can fall, although we are at a low point and demand should outstrip supply on these obama restrictions.
On the other hand, if you buy sub-$30/share and the dividend returns to where it was before, youll be earning over 10% gross yield per annum (ie > 10% of your investment every year). You'll be paid to wait for it to recover.
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Right now, there's a law that caps oil companies liability at $75 million. Peanuts for BP. Although, they have stated they will pay their portion and no doubt the government will sue them for billions. BP has $20 billion in cash, a huge credit line with next to nothing in interest, and they make about $4 billion net a quarter.
An interesting comparison for these companies who had disasters.
Massey Energy - 300 million gallons of sludge spill in 2002. Stock is up 313% versus a 23% loss for the S&P.
Exxon Valdez spill - Exxon up 930% versus the S&P's 271% gain.
All signs point that this is a buying opportunity.