I personally do not think the lawsuit will stretch out for a number of reasons. Mainly that it will do BP no good on several fronts.They need their stock to rebound badly and it will never with potentially triple damages cases this large out there. I feel that they will settle and in the range you speak of $600-800 mil, it then takes only a 33% haircut to the bondholder..(.67 cents on the dollar for bonds that are now trading for .07 cents) and you just cut another $500 million in debt....The math then becomes very very simple....Debt that is now $3.5 billion goes to $2.5 billion+/-....Less a couple asset sales maybe another $200 million, and you have a company that just cut it's interest expense by about half....That is assuming a couple % interest rate cut to maybe 10% average....With the Clipper wells doing average volume this company is say 200 million shares outstanding (shares added to compensate vendors, bondholders etc that participated in deal to make it happen) and you have a company with possibly 1 billion + in real tangible equity with the new structure.....At 200 million shares up from the present 52 million you should have a company that can make $100 mil profit and divide that by 200 mil shares and you have .50 EPS....Another way to look at it would be $1 billion equity divided by 200 mil shares and you get $5 per share that way.....Who would not be very very happy with this outcome.....Take settlement to $1 billion and its even easier......
This is very biased as I am hopeful for this type deal, but it is certainly possible...many companies make it out of BK.....You could still see a company with 200-300 million shares 3-5 years out making $2-3 per share profit and that would get stock back to where everyone made all their money and much more....
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