At first glance it seems odd that BP’s share price bounced almost 10% in early morning trading (17 June) after it suspended dividend payments for 2010 (the first $2.6bn of which was due on 21 June), agreed to pay $20bn into a compensation fund and with its final liabilities still unknown. The current estimate of clean up costs from the US Coastguard Service is around $6.5bn, but it remains early days.

Positive developments
BP also announced that it is committed to restoring the payment of the dividend in 2011, though investors need to be aware that we do not know what the starting level of future payments will be. The contributions to the compensation fund will be $5bn in 2010 and then quarterly payments of $1.25bn spreading the liability.  They also announced they would be selling around $10bn of non-core assets.

These moves will hopefully be enough to quieten down the more extreme outbursts in the media so that the focus can return to what is really happening.  Here a second containment system is being launched which should increase the amount of oil and gas being recovered.  However, the big question remains the execution risk in capping the well as no one has tried to do it a mile below the surface before.

Probably one of the most positive changes has come in the tone from the White House, where President Obama said last night that

“…BP is a strong and viable company and it is in all our interests for it to remain so…”

Market Sentiment
At the moment market sentiment seems to be saying that the bulk of those forced to sell by the dividend issues have done so but that potential buyers are remaining on the sidelines until we get some more clarity.