Good news from the Gulf helps lift BP shares as asset sale talks continue

SHARES in BP soared by almost 10 per cent yesterday as hopes rose over its latest attempt to contain the Gulf of Mexico oil spill.

Progress on putting a new cap on the leaking oil well came as speculation mounted over talks with US oil and gas company Apache and other companies over potential asset sales.

Shares closed at 399p, up by 34.2p or 9.4 per cent, adding to gains that have seen the company recover strongly from lows earlier this month of just over 300p.

Engineers have made "significant progress" towards putting a new cap on the leaking oil well, US coast guard commander Thad Allen said yesterday afternoon.

The cap is one of several devices BP has deployed as it works on a permanent solution now hoped for by mid-August.

Once the device is installed, BP will shut down two vessels siphoning oil from the leak to monitor pressure and check the integrity of the blown-out well.

Earlier in the day, BP's vice-president Kent Wells said he was pleased with the progress of the operation. "We have carefully planned and practised this whole procedure. We've tried to work out as many of the bugs as we can," he said.

But he warned that "something unexpected" could pose a challenge for the undersea robots installing the cap.

Meanwhile, speculation was continuing over asset sales, with sources close to the situation confirming talks had taken place with Apache.

It is also understood that the Obama administration had told ExxonMobil and Chevron it would not block a potential bid for BP.

Last month, the British oil major said it wanted to raise 6.7 billion from sell-offs to boost a 13bn fund to clean up the worse oil spill in US history. Yesterday, BP also reported that the costs of dealing with the oil leak including the cost of the spill response, and claims paid had now risen to $3.5bn (2.33bn).

Brokerage Collins Stewart said that despite the oil spill fallout, BP's second-quarter figures, due on 27 July, would demonstrate the group's "financial robustness".

"Although BP will start paying into the compensation fund in the second half of the year, this could well be offset by disposals proceeds, depending on the timing of the $10bn of asset sales planned for the next 12 months," analysts said.

"We continue to see good near-term upside in the shares, most particularly if the first relief well is successful in capping the Macondo well," the research note commented.

l Faroe Petroleum, the Aberdeen-based oil and gas company, has appointed Norwegian lawyer Hanne Harlem, as a non-executive director. She was previously deputy chief executive at Norsk Hydro.