Business

BP shares fell more than five per cent in New York on Friday to a 14-year low, as the costs rise for containing the oil spill in the Gulf of Mexico.

If the decline holds, BP will have lost more than US$100 billion in market value since a rig it operated exploded and sank in the Gulf two months ago.

The escalating costs, plus potential legal liabilities and BP's continuing struggles to contain the leak - now estimated at between 1.5 million and 2.5 million gallons per day - have eroded investor confidence.

Analyst Alastair Syme of Nomura Securities Company said Thursday that pressure is growing on the company to assure sufficient funding to cap the well and cover the costs from the spill, which the company now says totals US$2.35 billion.

Given the expensive cost of debt and the time it takes for asset sales, Syme said the company may need an investor - perhaps a sovereign wealth fund - to provide a short-term solution. Such an investment could dilute the shares further.

The company has access to about US$15 billion, and that should be enough for now, Syme wrote.

"But a sharp rise in liabilities or alternatively, a collapse in oil prices could leave the funding much tighter," Syme wrote.

BP's shares closed at US$60.48 on April 20, the day of the rig blast. On Friday, they dipped as low as US$27.07 - their lowest level since July 1996. They traded at US$27.20 Friday afternoon, down US$1.54.

At that price, BP shares have lost US$103.26 billion in value since April 20, and US$13.37 billion this week alone.

Analysts at Collins Stewart continued to recommend BP shares as a "buy" in a research note released Friday.

The company previously said that an investment in BP was "not one for the faint-hearted".

BP said a containment cap continued to collect some of the oil and gas flowing from the seabed, following a 10-hour interruption on Wednesday.

Even before that setback, the government's worst-case estimates suggested the cap and other equipment were capturing less than half of the oil leaking from the sea floor. And in recent days, the "spillcam" video still showed gas and oil billowing from the well.

Last week, BP bowed to President Barack Obama's demand that it set up a US$20 billion escrow fund to cover damages and suspend dividend payments.

- AP