Experts Disagree On BP's Potential Cash Liability The amount of money BP will need to deal with the oil spill in the Gulf is yet to be determined. Some experts say the $20 billion the company has set aside for compensation, cleanup and penalties will be roughly enough. Others estimate that BP could be liable for more than $100 billion.
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Experts Disagree On BP's Potential Cash Liability

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Experts Disagree On BP's Potential Cash Liability

Experts Disagree On BP's Potential Cash Liability

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BP: How much cash will BP need to deal with the colossal Golf of Mexico oil spill? There's no consensus on that. BP says it has significant flexibility to deal with the financial fallout from the spill, but it has yet to seal the gushing well. And if found guilty of a crime, BP's fines could reach many billions of dollars. NPR's Yuki Noguchi reports on the cash resources BP has at its disposal.

YUKI NOGUCHI: BP has at least one thing going for it.

BILL MANN: It is a spectacular cash- generating business.

NOGUCHI: But just a few weeks ago, in mid-June, few investors took that view. BP's stock then was in virtual free fall.

MANN: The market seemed to believe that British Petroleum was really at risk of bankruptcy, and I don't think that they're now.

NOGUCHI: However, Mann acknowledges there are significant X-factors. The relief wells could fail. Storms could spread oil further, and the company could face serious criminal charges and penalties.

MANN: I don't know where BP would possibly go to get a fair trial at this point.

(SOUNDBITE OF LAUGHTER)

NOGUCHI: But even if the penalties far exceed his estimates, Mann says, the crucial thing is that BP won't have to come up with this money immediately.

MANN: That's not happening in 2011, and it's not happening in 2012. It will be happening over decades.

NOGUCHI: Last week, BP ruled out the possibility of raising more money by issuing more shares. But then, according to some reports, the company's CEO, Tony Hayward, met with business partners in Abu Dhabi and discussed selling a stake in BP. That, if true, Philip Weiss says, would essentially be the same thing as selling new shares.

PHILIP WEISS: You can't just give somebody an ownership interest without giving them shares in exchange.

NOGUCHI: Weiss is an analyst with Argus Research. He says selling shares is a costly way for BP to raise more money.

WEISS: It would be another slap in the face to the existing shareholder base.

NOGUCHI: Yuki Noguchi, NPR News.

(SOUNDBITE OF MUSIC)

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