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BP Stock: Where Will It Trade in 2011?

Stocks in this article: BP HAL APC RIG SLB CVX XOM

BP completed another asset sale last week, too, shedding its exploration and production assets in Pakistan in a $775 million deal with United Energy Group Limited. The sale of assets in Pakistan is the latest in BP's plan, announced in July, to divest up to $30 billion of assets by the end of 2011, and pushes the total above the $21 billion in sales already announced by BP since the oil spill.

BP is also involved in ongoing negotiations with the Algerian government over BP's wishes to sell gas-producing fields as part of its global asset divestiture.

How much BP pays in the end, more so than how much BP is paid for its asset sales, is the unanswerable question. Last week, BP oil spill fund pay czar Kenneth Feinberg was pushing claimants to accept expedited payments from BP in exchange for agreeing to waive their right to sue the company separately. Individuals choosing this payment option receive $5,000, while businesses will receive $25,000 within two weeks of filing a claim, and are not required to provide more documentation for their claims. Some critics have called the "quick pay" option being offered by the government to oil spill claimants "extortion."

The debate over the oil spill claims, and the Jefferies upgrade to a hold -- with the reservation from the research firm that the oil spill liabilities are still a wild card -- raises the issue of how much better the world looks today for BP shares than it did when the shares were trading at $26.75.

It's not just the asset sale announced this week and the research ratings. In a more general sense, the ongoing oil-spill hearings and Presidential commission investigation have shown that the gross negligence claims being made by BP partners, such as Anadarko Petroleum (APC) and Halliburton (HAL), will be debated as part of a long and difficult court room battle.

BP is to blame, but seems to be far from alone as a bad actor in the oil spill, according to the ongoing revelations, the latest of which included the fact that a Halliburton worker on Deepwater Horizon went out to smoke a cigarette just as pressure in the well was reaching a breaking point. So the one-time "smoking gun" that envisioned BP ultimately going bankrupt, has now been complicated by smoke breaks, among other developments since the worst moments of the oil spill.

At the end of last week, the federal court overseeing the oil-spill case demanded that Transocean turn over internal records which the rig operator had been refusing to release.

As some analysts have contended all along, BP may be the only company so far to take a charge against earnings for the oil spill, but it won't be the last (read: Anadarko, which owns 25% of the well).

Amid all the developments since the Macondo well was capped in July and BP shares began a climb back to the $40 territory, it can't go unnoticed that oil prices have been testing the $90 per barrel level. While BP has become synonymous with another way to quantify the price of an oil barrel -- based on the formula for fines under the Clean Water Act -- the general bullishness on oil prices has lifted the entire sector.

Globally, the outlook for energy in 2011 is more bullish. GE announced last week its second big purchase of an oil services company this year, global deepwater player Wellstream, tapping the argument that the global slowdown in oil and gas exploration won't be a drag on the energy sector for much longer.

Also last week, Barclays Capital released a new estimate that global spending on oil and gas exploration and production would rise by 11% to $490 billion in 2011, led by increased spending in Latin America, the Middle East/North Africa and Southeast Asia.

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