BP - Short Short

Old news by now but I'm still negative on the prospects for BP. UK government has shown support now so I don't think it will go bankrupt but as a corporation there are some serious issues to work through. Not to mention the initial flow rate estimate of 1,000 bpd now looks like a joke against a current estimate of 60,000 bpd. For a company with oil as their main business we can conclude one of two things: (1) they are hopelessly incompetent and legitimately underestimated the initial flow rate, or (2) they knew the flow rate was higher and engaged in deceptive tactics to "cover it up" or obscure the truth, likely to minimize the legal liability. The truth does come out in the end, and BP has mud (oil) on its face. Transocean is another story (RIG-US) - old news as well but I wonder about their long term viability. At best, their market has been cut by a third to a half in the near term, at worst they will be tarred with the same brush and could face financial difficulties. I should have shorted both when the crisis was started!

Disclosure: no positions




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