NEW YORK (CNNMoney.com) — Despite the sharp fall in BP’s share price following the company’s inability to cap a leaking well in the Gulf of Mexico, most analysts say the selloff is overdone.
BP shares sank nearly 15% Tuesday after the company’s latest attempt to seal the leaking Gulf oil well failed over the weekend. The selloff accelerated just before the closing bell, when U.S. Attorney General Eric Holder announced a criminal probe into the spill.
Since the accident happened April 20, which resulted in 11 deaths and an oil leak of up to 19,000 barrels per day, BP shares have fallen nearly 40%, wiping out nearly $70 billion in shareholder value. Before the accident the company had a market capitalization of nearly $183 billion. Now it’s just below $115 billion.
Investors are concerned the clean up costs, lawsuits, and added restrictions from the spill, the worst in U.S. history, will sap BP’s earnings potential.
Plus, like most big oil projects, BP is self-insured for the operation, so all of the costs of the cleanup and damages will fall on its shoulders.