Looking over the horizon

BP has always been the stock of choice for pensions with its previous consistent payout to shareholders, providing a great return on investment. A lot of pensions took the hit in the aftermarth of the DeepWater Horizon Disaster.DeepwaterHorizon

After many years after the deep water Horizon disaster, does it look like BP are ready to regain investor confidence. Their stock price has dropped and rebounded off this level three times before. So why look at this now when oil prices are still dropping and the supply glut looks far from over.

Big picture

Oil porices may well stay the same for some time, but BP has taken a huge hit, based on markets. Oil prices remian in a downward spiral and even get into the $30 price point.

BP yields 6-7% is one good reason but not one to vase this trade on alone at this stage. A super massive been here before is a good reason, but still not enough to enter at this stage.

Negatives

  • new lawsuits, however $35 million is a drop in the ocean for BP.

The main and significant fundamental reason for BP decline outside the oil glut is due to its earnings, which have shrunk from $4.7 billion last year to just $0.5 last quarter. All eyes are now on the next quarter.

So why now

Getting in now as there is a technical set up that we can see if it gets triggered, whilst the resistance holds at these oil price lows. Especially now BP is settling and agreeing a final payout.

Quote from their second quarter earning reasle

“On 2 July 2015, BP announced that it has reached agreements in principle to settle all outstanding federal and state claims and claims made by more than 400 local government entities arising from the 2010 Deepwater Horizon oil spill. BP has accepted releases received from the vast majority of local government entities and the District Court has ordered BP to commence processing payments under the releases”

this should provide a good price support showing via technical also, if it proves not the case the stock is worth picking back up when changes to the oil price reverse and steady back towards the $60.

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