Should You Take a Chance With BP?

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With shares of BP (NYSE:BP) trading around $47, is BP an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

BP is an integrated oil and gas company. The firm provides its customers with fuel for transportation, energy for heat and light, lubricants, and the petrochemicals products used to make items like paints, clothes, and packaging. It operates in two business segments: exploration and production, and refining and marketing. BP provides energy products to consumers and companies worldwide. Without the oil and gas products provided, many consumers and businesses would not be able to operate on a daily basis.

BP has confirmed that a malfunction at an oil refinery in Whiting, Michigan forced an as-yet-unknown amount of crude oil into Lake Michigan, according to the Chicago Tribune and another local source. “We did have a processing disruption last night at the Whiting refinery,” BP spokesperson Scott Dean said Tuesday. “Some oil found its way into the cooling water system. It wasn’t long lasting,” he added. The incident was discovered around 4:30 p.m. on Monday, Dean said. There were no injuries as a result of the spill, the BP representative added. Environmental Protection Agency spokesperson Phillippa Cannon said that authorities are unsure of just how much oil spilled into the lake, and how long the discharge occurred for. “We don’t have an estimated volume yet,” she said, per NWI.

Officials at the Indiana Department of Environmental Management said that the leak was plugged by 1 a.m. Tuesday morning. Currently, emergency response crews from both the EPA and the U.S. Coast Guard are on site. BP has laid booms on the site to prevent the oil from moving out of the initial spill zone, a small cove near the refinery’s wastewater treatment plant and an Arcelor steel mill. BP spokesperson Scott Dean added that, “The winds are out of the north and have been pushing it toward the shore, which is helping our guys with clean-up.” The cold temperatures have also turned the oil into a waxy consistency, which Dean says makes it easier to collect.

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