Nightly News | June 16, 2010
HOLT: pollution they're causing, and of course the inevitable lawsuits -- a lot of people are beginning to worry the company won't survive long enough to pay its obligations. CNBC's David Faber joins us now. David , is there a risk all this could bankrupt BP before they make it right?
DAVID FABER reporting: Yeah, there's certainly a risk longer term, but, again, like so many other things, Lester , involved in this terrible spill, we simply don't have any certainty. Near term, it seems highly unlikely that BP would be in a position to have to file Chapter 11 bankruptcy . The company does have a lot of financial flexibility and continues to have a lot of financial firepower at its disposal. As Savannah reported, they cut their dividend, or suspended it for the year. That'll save $8 billion. They still have $5 billion in cash on the balance sheet, and they can sell assets, as well, all of that to fund that $20 billion escrow account that they agreed to fund with the president. That being said, longer term, one never knows. If the liabilities simply continue to mount for them, they may make a decision at some point to say, `Hey, we've had enough. We've got to go to Chapter 11 ,' and then all of those who filed claims simply become creditors, like any other, in a bankruptcy.
HOLT: And, David , we saw oil executives from other companies hauled before Congress yesterday. And it gets one to wondering, how is this affecting the oil industry at large?
FABER: Yeah, well, the cost of doing business is going up. There's simply no doubt about it . And all of them are watching very closely to see what the ultimate cost here is for BP . But near term, insurance rates have gone up, financing for doing anything having to do with digging for oil, certainly in a sea area, is going up. And that's of course not good overall for the business. But as long as that oil continues to come out of the Gulf of Mexico , we simply have no certainty what the ultimate bill's going to be for BP , or, for that matter, for all the companies that do business in that area.
HOLT: CNBC's David Faber with us in New York tonight. Thanks.