Monday, June 28, 2010

Matt Simmons' Predicted BP Bankruptcy: Six Degrees

Matt Simmons said on BP:

“They have about a month before they declare Chapter 11. They’re going to run out of cash from lawsuits, cleanup and other expenses. One really smart thing that Obama did was about three weeks ago he forced BP CEO Tony Hayward to put in writing that BP would pay for every dollar of the cleanup. But there isn’t enough money in the world to clean up the Gulf of Mexico. Once BP realizes the extent of this my guess is that they’ll panic and go into Chapter 11.”

A week after suggesting BP would declare bankruptcy, Matt Simmons "retired" as Chairman Emeritus of the firm he founded, Simmons & Company. That was June 16.

Fast forward two weeks to find ABC News reporting:

The Federal Reserve Bank of New York has been probing major financial firms' exposure to BP Plc to ensure that if the oil giant buckles under the costs of the Gulf oil spill, it won't put Wall Street or the global financial system at risk.

The Fed examination underscores market uncertainty about how the spill's staggering clean-up bill might affect Wall Street, a fragile economic recovery, or the multitrillion dollar energy market.

Another news story showed Simmons & Company advising Noble in its acquisition of Frontier Drilling from The Carlyle Group and joint venture, energy partner Riverstone Holdings. In the small world of big money men, former BP CEO Lord John Browne is managing director for Riverstone. Browne was in charge when the BP Texas City explosion killed 15 people.

Matt didn't stick to the party line. Definitive predictions and assignment of blame from industry experts are frowned upon. Especially by those with major skin still in the game.

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