GULF COAST, U.S. (TheStreet) -- If there were ever any doubt that the news could get worse for BP (BP), that doubt was likely erased on Tuesday. BP shares closed down 15%, and at the close of Tuesday trading, U.S. Attorney General Eric Holder officially announced that a criminal probe had been launched in the BP oil spill crisis.
"We have begun both a criminal as well as a civil investigation as is our obligation under the law," Holder told reporters after meeting with state and federal prosecutors. "Our environmental laws are very clear."
What isn't clear is what the criminal probe means for shares of BP and whether the announcement by Attorney General Holder will lead to another slump in BP shares Wednesday morning. It had been announced by the Obama administration on Monday that Attorney General Holder was being dispatched to the Gulf Coast, so the official announcement of a criminal investigation was not a surprise.
The criminal and civil investigation does, however, add one more overhang on BP shares. Congress is already at work on passing legislation that would increase the existing liability cap in an oil spill from $75 million to $10 billion, and in an unprecedented move is seeking to make the legislation retroactive to the BP oil spill. If criminal charges were proved against BP, though, Congress wouldn't need to take the unprecedented action, because a liability cap would be voided.Anadarko Petroleum (APC), which was down even more then BP on Tuesday, with a 20% decline, owns 25% of the BP well, and 25% of the potential liability. Anadarko shares have declined more than 40% since the oil crisis began with the oil rig fire and sinking on April 20. BP shares are down 38% during the same time period. >>BP Oil Spill Update: Top Kill Fails, What Now? BP investors fears that the government may also place sanctions on BP, which could cover existing offshore assets or plans by BP to undertake new drilling in the Gulf of Mexico. BP estimated that it will derive 14% of its 2010 production from Gulf of Mexico assets. Attorney General Holder said that federal agencies, including the FBI, are involved in the probe, and that the federal government would not have begun the investigation without sufficient evidence.
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