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BP shares rise as new well cap hailed as a success home

Shares in BP have jumped almost 5% in early trading in London after news overnight that the oil giant has successfully fitted a larger containment cap on the well that has been spewing oil into the Gulf of Mexico since April.

BP will today run a series of tests on the new cap to see whether it can halt the flow of oil, diverting the entire stream to ships on the surface. The original cap was loosely fitted onto the wellhead and only recovered a fraction of the estimated 35,000-60,000 barrels of oil per day spewing out of the failed blowout preventer on the sea bed.

Permanently shutting off the well will not happen until next month, when two relief wells that BP has been drilling since May converge on the bottom of the existing well. They will be used to pump specialised heavy fluids into the well and seal it.

But news of the initial success of the new cap helped push BP shares up 15p to 414p in early trading.

The shares have halved since an explosion on the Deepwater Horizon on April 20 killed 11 people and began one of the largest environmental disasters in American history. The drop in the value of BP has made the oil company vulnerable to an opportunistic takeover by one of its rivals.

Weekend reports suggested the Obama administration has told ExxonMobil – the world’s largest oil firm – that it would not stand in the way of a takeover bid for its stricken British rival. A merger would create a group with a stock market value of $400bn.

Tony Hayward, BP’s chief executive, has been shuttling around the world trying to tempt sovereign wealth funds into investing in BP stock in order to try and stop a takeover. He is understood to have met with the Abu Dhabi Investment Authority (ADIA) and the Kuwait Investment Office, a current investor.

BP said yesterday that the clean-up has so far cost $3.5bn (£2.33bn) and currently involves 46,000 people, more than 6,400 vessels and dozens of aircraft.

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