A couple of weeks ago, the book Fire on the Horizon, John Konrad and Tom Shroder, HarperCollins ,NY, 2011 was read and there was a connection to current events. Last week in the  Wall Street Journal, it was announced BP could be fined up to $ 18 billion for the 2010 Deepwater Horizon disaster. The book Fire on the Horizon is written with the people who did the drilling on the rig in mind. Their lives away from drilling, their training and how they ended up on the rig. Similar to all industries, because of the nature of them, the community tends to be close net. For example in the case of the rigs, most people tend to live within a day’s drive of Houston, because the company was not flying them anywhere in the US. The companies head office tends to be around Houston – that is where the companies which manage rigs are located. The book relays the people tried to do a good job, in the back of their minds delays cost millions of dollars, but success can mean billions for the company. There is always a balance between extreme safety, they are dealing with a very flammable material and  art of drilling which is backed by realms of data and experience.

Linking to dividend paying stocks, the Deep Water Horizon costs billions to clean up, but would have made BP even more billions of dollars had the well not exploded and the oil leaked into the Gulf of Mexico. At the time of drilling, BP was not expecting to send the oil to the mainland for the immediate future, but at the time of the blowout the company said it would pay for the clean up. Companies have a lag time between going to court and payment if found guilty. The President of BP has sold off divisions in order to place the money in a reserve fund until when the courts ruled their final verdict. As expected, as the dollar amount rises, all levels of appeal are used to extend the time between payment and guilty plea. It is also a risk management exercise in determining what the company feels is fair and what the courts rule. Companies unlike most individuals get sued on a regular basis, one expects lawsuits with every disaster, as long as the amount of the money does not cripple the company, it pays the fine and continues – hopefully with no disasters in the future.

There are more questions than others, till the next time – to raising questions.