Earlier this week, BP (BP) announced plans to sell up to $30 billion worth of assets over the next 18 months to help pay for the damages caused by the Deepwater Horizon oil rig explosion and spill in the Gulf of Mexico. Tony Hayward, BP's lame duck CEO, said the sale "can better align our strategic footprint with our global strengths," and that the initial capping of the oil spill "provides a firm basis for moving forward to reshape the company."

Which begs the question: What will BP look like this time next year? Will there even be a BP as we now know it? The answers to those questions rest on several variables: most notably continued asset sales, future litigation and the fate of the company's now-tattered public image.

Lawyers, Litigation and Liabilities

Matt Marshall, an energy analyst with Colorado-based Bentek, believes the final tally of BP's liability in the Gulf will be the thing to watch. "They've already been pushed toward a $20 billion escrow fund to pay out damages from there," he says, "but that's doesn't mean that its capped at $20 billion. It doesn't mean it will reach $20 billion. Time will tell see how much capital they'll have to raise from asset sales to meet that."

"If the EPA or some government entity gets involved in a lawsuit and becomes a plaintiff, that will be really bad news for BP," says Sanjai Bhagat, professor of finance at the University of Colorado (Boulder)'s Leeds School of Business. Bhagat has researched how the stock market treats lawsuits filed against companies. While he hasn't examined BP's situation per se, "generally what you find is when the plaintiff is a government agency, the decline in the market value of the defendant's stock is much more significant than if the plaintiffs were individuals."

Both men agree BP will be a much leaner company by the summer of 2011. "I would expect that they would follow the signs they've given us so far, " says Marshall, "That means selling some assets -- probably the ones that could be overvalued -- but also the stuff they would consider noncore; assets that are not central to their strategy moving forward. BP is trying to play a balancing game right now, between raising money from asset sales and also holding on to assets that look attractive."

Time to Sell. But What?

According to Bhagat, BP might spin off its alternative energy assets -- separating its traditional energy and renewable energy divisions. "Spinning off of divisions, of assets by companies, is not new," he says. "Usually, when a company announces a spin off, the stock market appreciates the announcement because it shows the company acknowledges that it can only do so many things well. If that's why BP spins off some businesses, it may be good news [for shareholders] and for claimants along the Gulf who are going to be involved in litigation. BP has to make an internal assessment as to how many separate divisions they can run efficiently."

Fallout from the Deepwater Horizon spill and the possibility of a sustained government moratorium on off-shore drilling will most likely prompt BP to look at more onshore development in places "where the risk of development is less, like Oklahoma, San Juan [basin in southwest Colorado], and the Rockies," says Marshall. "The current threat of regulation, the government and the market's opinion of their risk right now would encourage BP to move to onshore places as much as possible."

And as BP evolves in the post-oil spill environment, it will have to focus on making amends with the public -- particularly in light of the company's checkered operations record. "I think BP's senior management may get more focused on managing things competently, rather than just running it," says Bhagat. "Their lack of attention to safety and mechanical competence issues. It's not trivial to drill a mile below sea level. If they're wise, they will focus on basic competence."

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ronsjigslures123

The CEO was replaced because of PR stuff..he walked with his contract of 17 million bucks, and still ended up in a place ( incase you don,t know it) where oil is plentaful outside of russia, the richest independent oil OWNER in the world is from russia, he still gets his huge pay and LIFE GOES ON. so don,t hoot and holler to much PB probably did him a favor, he will make twice as much money now than he ever did, with and unbrella retirement package that would if you knew it would drop most peoples jaw to the floor. These people own a couple private jets and couple dozen houses all over the world and a Island or two. A CEO in this country or other countys running huge ANY huge company makes tones of money no matter what they do.

August 02 2010 at 2:35 AM Report abuse +1 rate up rate down Reply
ronsjigslures123

The Auto makers have been killing people for years with there shotty made cars and trucks, it just goes into litagation people get paid money and it goes on, the companys have ways of obsorbing the big payouts threw insurances and tons of other ways, even goverment tax exemtions. Corperations and corpterate laws are so tricky they can get away with muder and walk with a cash settlement, and ALL coperations know it. PB will absorbe this who thing and raise up and be a Giant again, all those people think there hurting PB by not buying gas, there nuts there only hurting there own people in the working sector, These large companys have so much cash on hand they can take a huge hit and still live on, 20 billion is not a huge hit to PB its just a BUMP in the road.

August 02 2010 at 2:26 AM Report abuse +1 rate up rate down Reply
rickets99

"Oh don't worry, some Republican will soon issue a proposal that we return the 20 BILLION dollar clean up fund that Obama demanded from BP and then have a national day of apology.."

I don't think that's so far-fetched. BP is already demanded a $10 billion tax credit (on top of the subsidies they receive) which is more than they even on the spill. So, they f up and they get effectively get paid billions of dollars for it. This is also after everyone said the taxpayers won't pay a penny for it. (Ha, ha)

As for the EPA doing anything meaningful, they are not acting in the public interest just like NOAA. EPA Senior Analyst Hugh Kaufman reportedly said that the use of toxic dispersant Corexit "was approved by Obama political appointees with little to no thought into the repercussions of their decision." So I wouldn't trust the government to effectively sue BP when they can't or won't even police them.

Hey, here's the biggest joke of all. Guess who is leading the investigation into BP's wrongdoing? The (let's dump more dispersant in the water and not let any reporters near anything) Coast Guard and the (bribed with drugs and prostitutes by the oil lobby) agency that used to be called MMS.

Oh, yeah, I have complete faith that these two groups will be really really tough on BP. And perhaps Thad Allen can write one of his world-famous "sharply worded letters" to BP again. Oh, yeah, that'll teach them not to kill 11 workers and thousands of species of wildlife! Give 'em hell, Thad!

August 01 2010 at 9:08 PM Report abuse rate up rate down Reply
jspe7

Oh don't worry, some Republican will soon issue a proposal that we return the 20 BILLION dollar clean up fund that Obama demanded from BP and then have a national day of apology for all the wrong things Obama did to BP
When that is done another Republican will demand, as they have done in the past, that the AMERICAN TAXPAYER pay for the spill in the Gulf, since they labeled it, a "natural disaster"
And shame on you, PRESIDENT OBAMA for wanting BP to take the responsibility---have you no compassion for the ultra-rich?

August 01 2010 at 5:48 PM Report abuse +1 rate up rate down Reply
havecash

One of the most poorly written and researched articles I've seen.

The Company is a GIANT in the industry; and, they'll continue to be a GIANT in the petroleum industry for years to come.

It was an accident, you mopes.

August 01 2010 at 5:21 PM Report abuse -1 rate up rate down Reply
1 reply to havecash's comment
rickets99

Oh, yes, havecash. This "accident" happened after BP promised to improve safety after they "accidentally" killed 15 worker in 2005 in a Texas refinery explosion and in 2006 after they "accidentally" spilled millions of barrels of oil in Prudhoe Bay, Alaska. What they intentionally did is lobby for the release of the PanAm bomber so they could do oil exploration in Libya. This company is a GIANT NIGHTMARE.

August 01 2010 at 9:14 PM Report abuse +2 rate up rate down Reply
ZIPTYED

WHY DO WE LET OTHER COUNTRY'S DRILL OUR OIL WHEN WE CAN DRILL IT OUR SELFS ITS OUR LAND AND WATERS AND ONLY WE WILL CARE ABOUT HOW THEY ARE TREATED OTHER COUNTRYS ONLY CARE ABOUT THE OIL

August 01 2010 at 4:17 PM Report abuse +1 rate up rate down Reply
1 reply to ZIPTYED's comment
herculesmulligan

BP is not "other country's (sic)". You and I own BP in our stock portfolios, mutual funds, retirement accounts, insurance, and college scholarship foundation accounts. You own BP. You benefit by its successes and you are injured by its failures. You are responsible for its decisions and its actions. This is a world economy. You are not above its behavior. You are BP.

September 02 2010 at 12:34 AM Report abuse rate up rate down Reply
BUFFALO

What our government should do is cap the fees that laywers can receive so
the money that BP does give up ends up in the hands of the people who need help not lawyers who need to make there payment on there BMW.

August 01 2010 at 12:55 PM Report abuse +10 rate up rate down Reply
1 reply to BUFFALO's comment
rickets99

"BUFFALO
12:55 PM Aug 1, 2010

What our government should do is cap the fees that laywers can receive so the money that BP does give up ends up in the hands of the people who need help not lawyers who need to make there payment on there BMW."

From the Gulf coast residents who have lost their industries, real estate investments and quality of life--Sue, baby, sue.

August 01 2010 at 9:16 PM Report abuse +2 rate up rate down Reply
actionhero

Not a word about the pention funds. You know, the funds BP is being sued for. Expect folly in the future. If this administration can make the wrong choice, it will.

August 01 2010 at 12:48 PM Report abuse rate up rate down Reply
gt76m

Rather than work with private sector he constantly attacks them. The payback..no jobs. I feel very bad for those out of work who want to work. Maybe this ill help truly deliver change that we can believe in rather than a socialist liberal policy that has not nor is not working in any other country.

August 01 2010 at 11:26 AM Report abuse +4 rate up rate down Reply
alfredschrader

We don't need BP to drill for oil. It free for the taking, just scoop it up from the Gulf of Mexico. It's like, right there.

August 01 2010 at 10:30 AM Report abuse -2 rate up rate down Reply