By: Todd M. Schoenberger
It’s a sad state of affairs in the Gulf region as euphoria has been met with a crashing reality check that the monster plug used to cap the broken pipe may not have completely done its intended job. Many in the region are waking up today thinking the end of this story is, definitely, not near.
For those not aware of the troubling situation, it seems a small leak and air bubbles are being discovered around the well pipe, which is leading many scientists and engineers to believe the well is not 100% contained.
The government is giving BP one more day to run additional tests to see if a leak is occurring; because if the oil is continuing to flow into the Gulf’s waters, look for all hell to break loose.
First, BP will have to remove the cap that so many of us had hoped would have ended this nightmare. The resulting impact will be to move back to square one and finish the relief valves, while millions of gallons of crude continue to pollute the region.
Second, this is quickly turning into a hot-potato political issue. As you may or may not recall, when the President gave his speech the other day announcing the news of the capped well, he proceeded to use the pronoun ‘I’ a mind-numbing nine times and never once credited BP with the plug.
Well, who should we blame now if the plug isn’t fully operable? I say, who cares. Just get this thing taken care of and do whatever you need to do to keep this from turning into another end-of-the-world scenario.
Even with this sudden turn of events, all eyes on Wall Street are wondering who will be buying the pieces that make up BP. The hottest asset the company has is its 22,900 service stations.
BP receives an annual revenue boost of over $1.6 billion from its franchise owners for doing virtually nothing except leasing out its name. And, before you think BP works like Valero and owns the bulk of these stations, think again. The company has only 200 on the books.
Therefore, using basis investment banking 101 knowledge, the “true” selling price of this one asset is somewhere between $5-$6 billion—and I’m providing a discount on this price tag due to the toxic conditions surrounding the BP brand.
Investors want to know who it’s going to be, and the only company out there with the clout and franchise expertise in the oil & gas field has to be ExxonMobil. But, investors will want to consider other players, as well.
Did someone say Wal-Mart??