BP Well Cap Leaky, White House Says - TheStreet

(BP oil spill story updated for new leak in BP cap, losses in Transocean, Anadarko shares)

NEW YORK (

TheStreet

) -- The White House announced Monday afternoon that BP's much ballyhooed well cap is now leaking at the top, along with seepage some two miles away, according to the Associated Press. Government officials are also monitoring bubbles that can be seen using deepsea cameras.

The latest issues since the initial cap success on last Thursday signal that the cap could be coming off sooner rather than later. However, if BP's improved siphoning system works, by BP's estimates it should be able to handle up to 80,000 barrels of oil daily, more or less able to handle all of the oil flow coming out from the leaking Macondo well.

The White House report was the latest piece of news in an already down day for BP

(BP) - Get Report

, whose shares began the week trading down on Monday by close to 5%, and the oil spill stock was taking shares of

Transocean

(RIG) - Get Report

and

Anadarko Petroleum

(APC) - Get Report

down with it.

New tensions surfaced over the weekend related to the successful BP effort to cap the well, with BP and the federal government expressing different views about the potential for dangerous seepage at the seafloor near the Macondo well.

Last Thursday afternoon, BP shares surged 7.5% in late trading, when its cap successfully stopped the flow of oil into the Gulf of Mexico. However, Friday selling in BP shares, coupled with Monday morning's negative trading, erased those gains, bringing BP shares back to the under-$36 share price at which they were trading last Monday.

It's not a big surprise that BP shares have taken a step back since last Thursday's rally, since the issues at the crux of BP's liability in the Gulf have not changed as a result of the cap. The latest tussle between the government and BP over the cap only compounds that existing uncertainty.

>>BP Oil Spill: 5 Burning Questions

The losses in Transocean and Anadarko shares were even larger than BP's loss on Monday, with Transocean shares down 8% and Anadarko, like BP, down by roughly 5%, also erasing any rally points from last week. While both Transocean and Anadarko had surged on Thursday afternoon, too, on Monday their losses left shares at lower levels than they had been even before the Thursday surge. At many points during the now three-month old BP oil spill, the losses in Transocean and Anadarko shares has exceeded the loss in BP shares.

While the BP cap has been successful in plugging the Macondo well, government concerns surfaced over the weekend that there were leaks at the seafloor that BP was not monitoring closely enough. On Monday morning, U.S. Coast Guard Admiral Thad Allen, President Obama's point man in the Gulf oil spill, said there had been an overnight conference between BP and government scientists during which BP gave assurances that it had the cap monitoring under control. BP continues to highlight the fact that no oil is leaking into the gulf, while the government reminds BP that the plan was never to have the cap in place over the well on a long-term basis.

The cap was not supposed to stay on the well as a clamp, even if it proved successful, which it has, so far at least, since tests began last week. The original plan was to only use the cap in the event of a hurricane, when ships at the surface being used to siphon leaking oil would need to abandon oil-spill containment operations. However, with the success of the cap and no sign of pressure problems in last week's well integrity test, BP has been leaning toward keeping the cap clamped down over the well until the relief wells are finished being drilled.

Also on Monday morning,

Bloomberg

reported that BP had run into a snafu in its planned sale of its stake in Prudhoe Bay, Alaska oil operations to

Apache

.

Bloomberg

had reported late last week that the BP-Apache deal was all but done and BP working feverishly to complete the deal before its July 27 earnings.

Halliburton earnings reported in the pre-market on Monday gave a boost to the energy sector, with Halliburton up close to 6% on a big earnings beat, and leading to a rally among oil services companies. However, Halliburton's outlook for the second half of 2010 was sobering, and the energy sector was down at midday Monday.

Halliburton provided one point of outlook that could be influencing companies like Transocean and Anadarko that operate in the Gulf offshore drilling market, saying that it expected its oil services business to get a boost from the expectation of tighter restrictions in Gulf drilling and need for new and improved equipment. Halliburton said it expects to take a hit to its earnings of between five to eight cents in the second half of 2010 due to the drilling moratorium, but longer term it sees the stricter operating environment in the Gulf as a business opportunity. The Halliburton Gulf silver lining message seemed to be, more or less: it's better to be an arms dealer than one of the primary combatants in the war between the government and offshore drillers.

-- Written by Eric Rosenbaum from New York.

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>>BP Oil Spill: 5 Burning Questions

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