This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

BP Returns From Exile, Wins Gulf Bids

Stocks in this article: BP CVX RDS.A KMP VLO PSX

Since the unfortunate disaster, BP has not only lost billions in potential revenue, its shares also tanked. Since April 2010, when the Horizon disaster was first reported, BP's shares dropped 21% in New York. On the other hand, two of BP's biggest competitors in the Gulf of Mexico, Chevron (CVX) and Royal Dutch Shell (RDS.A), have risen by 43% and 17% respectively in the same period.

The lifting of the ban came at a good time. The oil giant, which was kept away from the three previous lease auctions due to the ban, participated in the latest sale held on Wednesday. The company submitted 31 bids for drilling leases in the central Gulf and ended up winning 24 bids valued at $41.6 million. Interestingly, some of the acreage it has acquired lies in the Mississippi Canyon leasing area, which is close to its Macondo well, the epicenter of the oil spill.

With the ban lifted, the company could once again start getting these valuable contracts worth billions. It has already acquired attractive acreage which, in the long term, could give a boost to BP's production. Therefore, the company's new agreement with the EPA could be a game changer.

Moreover, BP is currently working on a way to bypass the 40-year-old crude export ban. The company has partnered with Kinder Morgan Energy (KMP) whereby the former has acquired around 80% capacity of the latter's $360 million mini-refinery in Houston. The facility, which opens in July, will be able to process 100,000 barrels of oil daily. All BP has to do is slightly shuffle the hydrocarbons so that they are considered processed, and then they can be exported.

Other refiners, such as Valero (VLO) and Phillips 66 (PSX), are also constructing mini-refineries which can also be used by other larger oil firms to bypass the crude export ban. If other oil companies also start to follow in BP's footsteps then the crude export ban would become rather meaningless for the oil majors.

For BP, these positive developments come just weeks after the company reported its quarterly results that were in line with estimates. For the fourth quarter, the company's profits dropped 27% year-over-year to $2.81 billion, which matched analysts' estimates as per data compiled by Bloomberg.

The decline came on the back of asset sales, weak refining margins, higher depreciation expenses and some big exploration write-offs. The company's daily production (excluding from Russia) dropped 1.9% to 2.246 million barrels of oil equivalents, but underlying output rose 3.7%, which was encouraging.

The spill's compensations, fines, clean-ups and legal costs increased to a massive $42.7 billion in 2013, from $42.5 billion in 2012. In the fourth quarter, the company spent $119 million as expenditure related to the Gulf of Mexico disaster.

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs