Wednesday’s early price action in BP:

Aside from Obama’s kick ass comment, weighing on the share price this morning is news that 42 members of Congress have sent a letter to BP CEO Tony Hayward demanding the dividend be suspended until the spill in the Gulf of Mexico is cleaned up.

And here is said letter:

Tony Hayward
Chief Executive Officer BP
1 St James’s Square London
SW1Y 4PD

Dear Mr. Hayward, As BP presides over one of the greatest environmental and economic catastrophes of our time, we find it troubling that your company plans to divert financial resources to shareholder dividends and slick marketing campaigns.

Even as oil threatens to flow into the Gulf of Mexico for months to come, press reports indicate that you hope to distribute $10 billion in dividends to shareholders before the full cost of this devastating oil spill is known. At the same time, your company has launched an aggressive public relations campaign, with full page ads in major newspapers and a reported $50 million television blitz.

We urge you to halt your planned dividend payout and cancel your advertising campaign until you have done the hard work of capping the well, cleaning up the Gulf Coast and making whole those whose very livelihoods are threatened by this catastrophe. Not a moment before then should you return to business as usual.

Now, there will be a follow-up press conference later today in Washington — 11am in the Capitol Visitor Center Studio A (HVC-117) if you’re interested. Congressman Peter Welch and Lois Capp will repeat their calls for BP to halt its dividend payments and generally try to whip up the anti BP/British frenzy.

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Meanwhile, Dougie Youngson, the Arbuthnot analyst, who said there was a possibility BP could be broken up, has slightly tempered his view in a new note:

So is a break-up or bankruptcy a realistic outcome? The market appears to be coming around to the idea that it is actually a possibility. However, there are only a limited number of companies who we think would be politically acceptable as candidates should it get to this stage. Given the level of anti-British rhetoric, it would seem unlikely that Shell would get much traction. Whilst the Chinese and Russians have the deep pockets to pay for a transaction of this scale, this would be unacceptable to both the American government and to the electorate. That leaves only the US majors ie, ExxonMobil, Chevron and ConocoPhillips who would have the backing from the US.

We feel that too many un-quantified uncertainties remain to make us change our view in the short term. We therefore continue coverage of BP with a Sell recommendation.

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And on a lighter note, we strongly recommend The BP Oil Spill Re-Enacted By Cats In 1 Minute video.

Related links:
Danger! Falling knife – FT Alphaville
The value case for cutting BP’s payout – FT Editorial

This entry was posted by Neil Hume on Wednesday, June 9th, 2010 at 9:39 and is filed under Capital markets, M&A. Tagged with bp, Deepwater, Dividend, Lois Capp, Macondo, Peter Welch, Tony Hayward. Edit this entry.