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BP’s growing isolation

MarketWatch

June 14, 2010, 2:18 p.m. EDT

By MarketWatch

SAN FRANCISCO (MarketWatch) — BP PLC executives troop back to Capitol Hill Tuesday for another tongue-lashing over the catastrophic Gulf oil spill. This time, however, lawmakers are pulling BP’s long-time peers into the slugfest.

On Tuesday, the House Committee on Energy and Commerce will question top executives from Exxon Mobil Corp. /quotes/comstock/13*!xom/quotes/nls/xom (XOM 61.37, -0.49, -0.79%) , Chevron Corp. /quotes/comstock/13*!cvx/quotes/nls/cvx (CVX 74.18, +0.12, +0.16%) , ConocoPhillips /quotes/comstock/13*!cop/quotes/nls/cop (COP 52.80, -0.70, -1.31%) and Royal Dutch Shell PLC /quotes/comstock/13*!rds.a/quotes/nls/rds.a (RDS.A 52.38, -0.02, -0.04%) about the spill’s impact on their industry.

Including BP /quotes/comstock/13*!bp/quotes/nls/bp (BP 30.67, -3.30, -9.71%) , these are Big Oil’s Big Five in the United States, all with huge stakes in the future of the Gulf of Mexico and deepwater drilling in general.

When BP’s Macondo well blew out in April, the industry put up a united front. They knew they would all feel the sting of a ban on deepwater drilling and closer regulatory scrutiny.

Hot Stocks: BP retreats

BP shares tumble as the oil firm grapples with mounting regulatory woes tied to the spill in the Gulf of Mexico, which is approaching its eighth week. However, the broader energy sector is building on recent gains. MarketWatch’s Steve Gelsi reports.

When they file into this hearing, however, there’s likely to be a crack in that united front. BP has turned toxic, and the others know it. It’s in their own interest now to argue against rules that would hurt the industry while letting BP dangle alone.

And if they leave lawmakers with the impression that the worst oil spill ever in U.S. waters was the result of one company’s recklessness, that’s fine.

But there might be another, more opportunistic motive at work here.

BP’s shares have been hammered. The rest of the offshore oil industry took a heavy blow as well, but many of those stocks are turning around. Energy equities were among the market’s strongest performers last week. Meanwhile, BP continues to tank, down another 8% in New York on a day when almost every other oil company was up. Read about BP’s mounting problems.

There’s increasing speculation on Wall Street and in the oil industry itself that BP might be so badly wounded it can’t recover. If that’s the case, BP’s extensive worldwide assets would be up for grabs.

So it’s hardly any wonder Exxon Mobil, Chevron, ConocoPhillips and Royal Dutch Shell are circling, taking a close look at whether distressed BP assets might make a tasty addition to their own holdings.

Given the political climate in Washington and the sentiment in the marketplace, BP has every reason to suspect it might soon find itself on somebody’s menu.

Jim Jelter

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