(BP poll story updated for Algerian asset sale talks, Transocean records)
NEW YORK ( TheStreet) -- Aren't you just kicking yourself for not buying BP ( BP) back when shares of the integrated oil major slipped below $27 after the Gulf of Mexico oil spill? Sure, it might have seemed like the environmentalist's moral equivalent of investing in German industrial giants during World War II -- when the mild-mannered makers of toasters and coffee machines were churning out ammo and tanks for the Axis war machine -- but boy was that BP stock price low back in the wake of the worst oil spill in U.S. history.

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I mean, one had to know there was just a little bit of market paranoia sending BP shares to $26.75 at the end of June, when rumors of the oil company going bankrupt were greatly exaggerated. Granted, there was no end in sight to the oil spill, the top hat and original top kill were on the top of the scrap heap of oil spill history, and the bottom kill looked like a three-month project. Still, for a company with $50 billion or so in annual profits, a case had to be made for BP shares being a deepwater, deep-value steal, even as oil kept spewing into the Gulf of Mexico and Americans went so far as to shun BP gas stations and join Facebook groups created to simply hate the British oil company.

Indeed, last week represented both the best and worst in BP post-oil spill. BP shares hit their highest level last week since the oil spill crisis, at close to $45, and shortly thereafter, the U.S. government filed its first lawsuit against BP, claiming a wide range of environmental regulatory violations.

So which is it? Has the all clear been signaled for BP shares or is the government lawsuit the fist indicator of another leg down in BP shares?

The Justice Department lawsuit was well telegraphed, and even though BP shares ended last week with a small gain over the five trading sessions, BP shares did decline over the last two days of the week after the lawsuit was revealed. On Monday morning, BP shares opened up slightly.

Jefferies' London-based research group restarted coverage of BP at a hold last Wednesday, and its reasoning reflects the ongoing schizophrenic nature of BP shares. Jefferies stated that coverage was merited but that the ongoing risk of liabilities from the Macondo oil spill made it difficult to do more than recommend a hold. Certainly, that risk can't be sloughed off any time soon.

The U.S. government's first major legal move is just the opening salvo in what's likely to be a long legal oil spill battle, suing BP -- and several other companies involved in the oil spill -- in a New Orleans federal court, and asking a federal judge to waive the $75 million liability on damages which exists under the Oil Pollution Act. The other companies named in the suit include Transocean ( RIG) and Anadarko Petroleum ( APC).

There were several headlines last week highlighting the fall in BP's London-listed shares, and one headline saying BP investors were "spooked," but the more accurate headline might be that BP investors expected this day was coming all along. In fact, it had to come, and the fact that the government is asking the court to waive the $75 cap on oil spill liabilities is a non-event as far as BP is concerned, too, as it already agreed to not invoke this law in relation to its oil spill liabilities.

There's still another legal headline looming for BP, too, which may be much scarier for investors. The government may still file criminal charges against companies implicated in the oil spill, as occurred in the case of the Exxon Valdez.

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