Today was characterised by “reversal”, and nowhere was the reversal more profound than in this oil company. The venerable Po Pimp and myself had a fine day, stacking our coins and counting them tenderly.
Anadarko is being sued for massive liabilities for the second time in three years. The first was for their non-operational interest in the Macondo well – which they could have easily gotten off on.
The second is for spinning off a company in 2001 called Tronox, which amongst other things, was responsible for cleaning up several thousand polluted sites, thanks to the nature of the business they are in (colorings, like paints).
Low and behold, eight years later during the worst economic crisis in almost 100 years, Tronox goes bankrupt. Imagine that. A company that went bankrupt in 2009?
So now their creditors, including the EPA, are trying to pin APC with spinning off a “shell corporation” that was intentionally strung with bad assets and excessive liabilities (naturally, Tronox is no longer responsible for anything, as they were relieved of those inconveniences in bankruptcy court). And the price they’re trying to hit APC with is $25 billion.
Hah! Might as well be $250 billion, for all the chances they have of winning, or collecting for that matter.
The piss head art majors in charge of the EPA seem to be figuring that out, as now APC is in settlement talks.
But APC’s management is pragmatic. They could have put a screw in BP when the Macondo well blew, but instead they agreed to settle for a few billion over a long haul. Whatever the reasoning, they seem to feel that settling on these environmental issues, even when they’re completely without blame, is better than…something.
Personally, I think it’s worse for their image to get caught settling, because then deranged environmentalists will hold it over their heads for the rest of their lives. I’d prefer they run the EPA into the cliff side, and watch them walk away from the suit with nothing.
But I’m not in charge here, am I?
So APC will probably agree to a public wrist slap and handing a small victory over to that pathetic excuse of an organization, in exchange for being left the hell alone, and maybe some goodwill on some practically inconceivable level.
Sadly, I only have about 5% of my assets in APC, having taken outsized gains on the other half of the shares I used to own, just last week.
Still, with the state of affairs, that’s more than enough oil company for me.
Also, yesterday, I added back on a 5% stake in ERY, leaving me a 25% cash position plus that aforementioned short interest.
Now, I’m off to enjoy some red meat. Enjoy your evening.