On the face of it, BP can easily afford to pay the short-term costs of the oil well that is leaking millions of gallons into the Gulf of Mexico. Last year, the company earned $17 billion, and it ended the year with more than $8 billion in cash.  But concerns about BP’s ability to meet all its obligations over the long haul — or even survive the crisis intact — are rattling the government, Gulf Coast residents and investors.  The ultimate cost of the disaster remains uncertain. Wall Street estimates have put the bill for BP at anywhere from $17 billion to $60 billion, including penalties, damages and cleanup costs for the Deepwater Horizon disaster.  Beyond the financial costs, the multinational oil giant is facing a growing number of risks that could jeopardize its future. The company is almost certain to face tougher scrutiny from regulators. Opportunities to drill wells may be limited as governments and partners shy away from the company’s tarnished reputation.  At the extreme, revenue could be sharply curtailed if the federal government found that the accident was caused by gross negligence and tried to revoke BP’s right to operate in the United States, which accounts for one-third of the company’s business.  “A company that faces this kind of catastrophic situation is going to have its opportunities limited, and countries are going to look at BP in a different way,” said Edward C. Chow, a senior fellow at the Center for Strategic and International Studies. “It will take quite a long time to recover business momentum.”  To make sure that all claims are paid, the Obama administration has stepped up the pressure on the company, demanding that it set aside money to pay for future liabilities before paying dividends to shareholders, which now amount to about $10.5 billion annually. Senate Democrats are asking BP to set up a $20 billion cleanup fund.  BP, which has spent about $1.5 billion on the cleanup so far, has said it expects to be able to pay all spill costs from its regular operating funds.  But in response to the federal government’s requests, BP’s board met Monday to consider its options. A spokesman said the company did not expect to announce decisions about its dividend until after its chairman and its chief executive spoke with Mr. Obama on Wednesday at a meeting the president had called.  A person with direct knowledge of the discussions said the board was considering three options: suspending payment of the dividend for two quarters, paying the dividend in bonus shares rather than cash, or placing an amount equal to the dividend payment in escrow while continuing to pay for the cleanup separately.  Under the last option, BP would not tap the escrow fund unless the cost of the cleanup and claims exceeded what it could pay out of its regular cash flow. This option, the person said, could offer some reassurance to Washington and to shareholders that BP would meet its financial obligations to both.  Concerns about the company’s ability to balance the competing demands on its cash have prompted investors to dump the stock. On Monday, BP shares fell almost 10 percent in New York trading, contributing to the stock’s nearly 50 percent plunge since the April 20 accident.  “The costs are going to be significant, yes, and potentially they are an existential threat to BP,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.  In the bond markets, the cost of insuring against the possibility of BP defaulting on its debts has soared. The price of a $10 million five-year credit default swap has gone from $50,000 a year before the spill to $425,000. “There’s a lot of nervousness,” said Otis Casey, an analyst at Markit, a financial information services company.  The company has hired Goldman Sachs, the Blackstone Group and Credit Suisse to help it evaluate its financial options. If BP needs to raise cash quickly, those options could include asset sales or more complicated financial maneuvers.  In recent days, the administration has raised the prospect of forcing BP to pay the salaries of workers affected by the government’s moratorium on offshore oil drilling. This is an unprecedented demand, and legal experts said the argument had little chance of standing before the courts.  The government must carefully balance the demands it places on BP with its concern about recovering all costs, analysts said.  “The government is feeding the frenzy that is taking place within the financial markets,” said Chris Ruppel, managing director for capital markets at Execution Noble, an international investment bank. “It will only make it that much more difficult for them to adequately remediate the long-lasting effects of the spill.”  Michael J. de la Merced, Christine Hauser and Julia Werdigier contributed reporting.
Although BP  generates billions of dollars in profit every quarter, the oil spill is rattling government and investor confidence.