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BP shares plunge 15% as more investors flee

June 9, 2010 | 12:49 pm

Shares of BP are plummeting for a fourth consecutive session as investors bolt amid mounting U.S. pressure on the oil giant over its catastrophic Gulf of Mexico oil spill.

The company’s U.S.-traded shares were down $5.31, or 15%, to $29.36 at about 12:50 p.m. PDT. The stock is heading for its lowest closing price since 1996.

The shares now have lost most than half their value since April 20, when the spill began after an oil drilling rig exploded.

Bargain hunters who stepped in last week, driving the stock up 7.5% over June 2-3, have been slammed as the price collapse has resumed.

The company last week held out the possibility of maintaining its dividend payments to shareholders. The current annualized dividend on the U.S. shares is $3.36, and the next quarterly payment of 84 cents a share was expected July 27.

But dozens of U.S. lawmakers on Tuesday called for BP to cancel dividend payments and advertising spending to preserve cash for cleanup and reparations. President Obama also has lashed out at the idea of BP continuing to pay dividends.

From a letter to BP Chief Executive Tony Hayward, co-signed by Rep. Lois Capps (D-Santa Barbara), Rep. Peter Welch (D-Vt.) and others:

Even as oil threatens to flow into the Gulf of Mexico for months to come, press reports indicate that you hope to distribute $10 billion in dividends to shareholders before the full cost of this devastating oil spill is known. At the same time, your company has launched an aggressive public relations campaign, with full page ads in major newspapers and a reported $50 million television blitz.

We urge you to halt your planned dividend payout and cancel your advertising campaign until you have done the hard work of capping the well, cleaning up the Gulf Coast and making whole those whose very livelihoods are threatened by this catastrophe. Not a moment before then should you return to business as usual.

Although BP said Friday that it had “considerable firepower” to deal with the costs of the spill and still remain financially healthy, it didn't commit to its current dividend, saying a decision would be made as the company neared its next quarterly earnings report due July 27.

BP's cash payouts have long been a major lure for investors. With the latest meltdown in the stock, more investors clearly are giving up hope that next quarter's dividend check will be in the mail.

-- Tom Petruno

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