Do You Trust BP?

BP presents its version of oil spill events, and it shares plenty of blame with other companies. Do you trust BP's report? Take our poll below, to see what other investors think.
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(BP report poll story updated for potential BP internal conflicts, political risks)

NEW YORK (

TheStreet

) --

BP

(BP) - Get Report

has released its first post mortem on the Gulf of Mexico oil spill -- and to the surprise of no one, the British oil giant argues that rig operator

Transocean

(RIG) - Get Report

and deep-water well engineer

Halliburton

(HAL) - Get Report

should share the blame for the oil rig explosion and oil spill.

>>BP: No Smoking Gun in Oil Spill

Investors seem to buy into the BP report, at least a few investors, with ADR shares of BP up by as much as 3.5% after the BP oil spill report was released at 7 a.m. ET on Wednesday. Yet that may as had as much if not more to do with a ratings upgrade from Fitch Ratings released at the same time.

To state that BP is not exactly an impartial oil spill investigatory commission would be an understatement as obvious as the infamous understatements from outgoing BP CEO Tony Hayward that the environmental impact from the oil spill would be minimal, and that BP didn't have all the tools in its toolkit that it would have liked to contain the oil spill.

It was hard to make a direct case for the BP report being the sole reason for the rise in BP shares on Wednesday. The markets were up again after a losing Tuesday, and the energy-sector gains were outpacing the broader markets early on. Additionally, if BP shares rose as a result of its oil spill report spreading the blame around, one would expect that Transocean and Halliburton might see some negative trading action. This hasn't been the case, with both Halliburton and Transocean shares unaffected by the BP blame game.

It's probably fair to assume that if investors expected BP's report to say that BP accepted responsibility for the oil spill but was far from alone in causing the spill, investors expected Transocean and Halliburton to be targets of the BP report. Therefore, trying to price in any short-term spike or drop in any of these stocks related to the BP report seems like a penny-wise, pound foolish situation.

And let's not forget that the government is far from blameless.

>>4 Things We Hate About the Obama Oil Spill Review

Given that the legal wrangling resulting from the oil spill will play out over years, and that the potential liabilities for BP and the other oil spill companies could reach near the $100 billion mark, the more important question is whether any investor should trust anything BP has to say about the causes of the oil spill.

Do You Trust BP? Vote Now

Vote Now on the BP Oil Spill Report

A new analysis released by Fitch Ratings on Wednesday estimated that BP may face total pending liabilities of between $35 billion and $67.5 billion. That's 35 billion to 67.5 billion potential reasons for BP to do everything it can to make sure that other companies share in the penalties resulting from the oil spill.

Of course, BP went out of its way to present its oil spill investigative team as a firewalled army operating within BP, but in no way beholden to BP management, and while it wouldn't be fair to place even a grain of faith in this version of the investigative story, that grain of faith has to be balanced by a grain of salt.

Within days of the BP report's release, it became clear that the firewall surrounding the investigation team was not exactly what BP had claimed. BP conceded to the

Wall Street Journal

that BP lawyers had reviewed the investigative team's report and provided advice and counsel, though BP declined to be more specific, and said that these lawyers too were walled off from the company.

It may be much ado about nothing, and the bigger issue is likely to be whether BP went too far in downplaying its own fair share of blame in its report, in the same way that it went out of its way to play down almost every aspect of the oil spill in its early days.

In the worst moments of the oil spill crisis, BP top brass provided little basis for belief in their words as being anywhere near an accurate representation of the truth. The BP effort to be truthful about the oil spill has improved.

>>BP's Image Improves...Really

The BP report even notes the "widespread pollution" in the Gulf of Mexico caused by the oil spill, a far cry from the minimal environmental impact that outgoing BP CEO Tony Hayward once used to describe the oil spill. The difference between the two statements leads directly to the issue of whether BP long ago discredited itself in regards to any information it might attempt to push into the public domain regarding the oil spill.

Halliburton and Transocean immediately blasted BP for its report, and so did lawmakers. The political risk in the BP oil spill may, in fact, not be well-served by a BP report that seeks to shift too much of the blame. Aside from the divvying up of the huge oil spill financial liabilities, BP still faces the threat of a U.S. government that could seek to bar it from operating in the Gulf of Mexico.

BP may think that it's version of events, showing no problems with its approach to drilling, are proof of why it should not face political sanctions from the U.S. However, if it turns out that the BP report was a whitewash it may only increase the ire of politicians who already need no excuse to take a hard line against the British oil company. From this respect, the BP report may not just be a legal gamble, but a risky political gamble too.

Do You Trust BP? Vote Now

Vote Now on the BP Oil Spill Report

On the other hand, it's not as if Transocean or Halliburton are innocent victims being thrown overboard by BP. When Transocean went out of its way to accuse BP of "gross negligence," a skeptical investor might have thought to himself that the rig operator protested too much.

The war of words, documents detailing real-time tests of well integrity, and graphical appendixes portraying well casings and well annuluses, will go on well beyond the release of the BP report.

In

Enemy of the People

, Henrik Ibsen's famous play about the culpability of the masses in accepting a version of events provided by corrupt, powerful interests, a lone doctor stands against an entire town and its politicians in arguing that a water supply has been environmentally contaminated causing sickness.

Among the most famous quotes from the Ibsen play are, "the strongest man in the world is the man who stands most alone," and "A minority may be right; a majority is always wrong."

Forget Ibsen. Congressman Ed Markey (D. Mass.), had a nice quip about the BP report on Wednesday, noting that the report is not BP's mea culpa and that, "Of their own eight key findings, they only explicitly take responsibility for half of one. BP is happy to slice up blame, as long as they get the smallest piece," Markey said in a statement.

So at least one simple question can be asked, and answered, by investors today. Is BP a minority that can be at all trusted, or does the investor need to stand alone and outside any version of oil spill events offered by BP? Take our poll below, to see what

TheStreet

thinks.

-- Written by Eric Rosenbaum from New York.

RELATED STORIES:

>>BP: No Smoking Gun in Oil Spill

>>BP Pushes Back Next Earnings Report

>>4 Oil Stocks That Can't Leave the Spill Behind

>>BP's Image Improves...Really

>>4 Things We Hate About the Obama Oil Spill Review

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