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Old 07-12-10, 05:51 AM   #1
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Post Asset sale talk and well hopes drive BP shares higher (Reuters)

Reuters - BP shares rose to their highest in nearly a month on Monday, driven by reports of asset disposals to help pay for the company's U.S. oil spill and hopes for a new system to capture almost all the spewing oil.

BP said the cost of the spill was now about $3.5 billion, and that it had collected or flared 749,100 barrels of oil from the well, which ruptured in an explosion in the Gulf of Mexico on April 20 that killed 11 people.

The British oil company is under enormous pressure to halt the oil, which has polluted coastlines on five U.S. Gulf states, threatened multi-billion dollar fishing and tourism industries and killed birds, sea turtles and dolphins.

BP is installing a new capping system that could capture up to 80,000 barrels per day (3.4 million gallons/12.7 million liters), up from about 25,000 bpd. Robots operating a mile under the ocean surface will take up to a week to put the system in place.

BP shares rose 6.9 percent to 390 pence to be the top gainers in Europe, hitting their highest since June 14 and setting them on track for their biggest one-day gain since June 17.

A source familiar with the situation said on Sunday that BP was in talks with U.S. oil and gas company Apache Corp and other companies over potential asset sales, and the Sunday Times reported that the talks involved $12 billion in assets.

The Wall Street Journal said BP was in talks with a number of companies on a spectrum of assets.

BP declined to comment on the reports.

"The news appearing in the newspapers that they're about to sell all sorts of assets and raise the cash they need for the claim fund is reassuring," said Irene Himona, analyst at Exane BNP Paribas in London.

"There's an awful lot of noise in the press about everything, including cementing this thing, selling assets, following the complete collapse in the stock and the usual market undershoot, and now all the noise is on the positive side," she said.

BP said that its first relief well, through which it plans to pump specialized heavy fluids into the original well, was likely to be completed by the first half of August as originally planned.

"There is a huge sigh of relief in the market that the news around BP isn't getting any worse at the moment. But of course everyone is waiting anxiously to know more about the outcome of the relief well," said a fund manager who asked not to be identified.

"It is also not that surprising that the stock has started to recover somewhat -- it was heavily sold prior to this and the speed of the fall toward the end suggests that the selling was pretty indiscriminate," he said.

The Sunday Times reported the Obama administration had told Exxon Mobil Corp and another group -- which it said was thought to be Chevron Corp -- it would not block a bid for BP, citing oil industry sources.

SHARE RECOVERY

BP's shares have endured a battering due to the 84-day-old crisis, losing $100 billion in market capitalization at one stage. But the stock has had a good three weeks after hitting a 14-year low on June 25, gaining a third in value from that level.

Part of the recovery is due to speculation that BP is approaching several sovereign wealth funds for cash to ward off a takeover and to help pay for the spill. BP Chief Executive Tony Hayward met an Abu Dhabi state investment fund last week.

The Obama administration has pressed BP to take advantage of calm weather and move forward with the containment.

Senior Obama adviser David Axelrod, asked on the "Fox News Sunday" program about hopes the spill will be contained by the end of July, said he was "reasonably confident but obviously this thing is uncharted waters."

The U.S. Justice Department has started interviewing witnesses as part of a criminal and civil investigation into the worst oil spill in U.S. history.

People living at the heart of the crisis expressed frustration over the pace of the cleanup.

For Billy Nungesser, president of Plaquemines Parish in Louisiana, the top priority is more boats to mop up the oil.

"Number one is a sense of urgency," he said. "To get out on the water to work 24/7. We have to be on the front lines," he said.

The Obama administration's commission on the spill is due to hold its first hearing in New Orleans on Monday. The commission consists of seven engineers, environmentalists and former politicians who plan to investigate decisions by oil companies and government regulators that may have led to the disaster.

As the spill hit local economies, animal welfare groups are distributing donated dog food to Plaquemines Parish fishermen and others to help struggling owners keep their pets.

Donna Schexnayder of the Plaquemines Animal Welfare Society said she has noticed more pets being given to the shelter and expects the number to grow. "We're starting to see it a little more," she said. "Within the next month or so, it will hit."

Cherie Pete teared up as she described the changes confronting fisherman who are now mopping up oil.

"Now they have the hard hats on, and the tags around their necks," Pete said. "They don't look like our men. Our total way of life has already changed."


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