CORRECTED – WRAPUP 1-Investors worry about seepage at capped BP well

(Corrects second paragraph in second block to BP lobbied the UK
government, not the U.S. government)

* Shares fall 2.5 pct, off 40 pct since spill began

* BP: no comment on seepage, says has spent $3.95 bln

* Paper says may sell refineries, petrol stations

By Tom Bergin and Chris Baltimore

LONDON/HOUSTON, July 19 (BestGrowthStock) – Investors fretted about
possible seepage from BP’s (BP.L: ) (BP.N: ) capped Gulf of Mexico
well on Monday and speculation grew about assets the company may
sell to pay multibillion dollar costs for its oil spill.

BP shares, which have been rallying over the past three
weeks, slipped 2.5 percent after the top U.S. government spill
official said that engineers had detected seepage, suggesting
there may be problems with the cap that stopped oil spewing into
the water nearly three months after a rig explosion.

A BP spokesman said the seep was detected by its engineers
but it was unclear whether the source was the blown-out
well, adding that seeps were a natural phenomenon in the Gulf.

The company said in a statement that it had spent $3.95
billion so far on efforts to tackle the well and that it aimed
to permanently kill the well in the first half of August.

It said it continued to run an integrity test on the well,
on which it placed a cap last week that appeared to seal the
well and that pressure continued to rise.

BP choked off the flow a mile (1.6 km) under the water’s
surface with a cap on Thursday, marking the first time oil has
not spewed since an April 20 explosion on an offshore rig killed
11 workers.

Analysts said investors were concerned about reports of the
seepage, though any updates on a more permanent relief well to
kill the leaking well were more important.

“There’s been a lot of punting around the stock,” Richard
Griffith oil analyst at Evolution Securities said, adding that
would likely be continued volatility.

“The only thing that really matters is the relief well. If
the relief well doesn’t work, they will have a massive problem,”
he said.

Late on Sunday, the U.S. government released a letter to BP
Chief Managing Director Bob Dudley from retired Coast Guard
Admiral Thad Allen that referred to an unspecified type of
seepage near the mile-deep (1.6 km-deep) well along with
“undetermined anomalies at the well head.”

“I direct you to provide me a written procedure for opening
the choke valve as quickly as possible without damaging the well
should hydrocarbon seepage near the well head be confirmed,”
Allen wrote.

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For full spill coverage http://link.reuters.com/hed87k

Breakingviews [ID:nLDE6671DQ]

Insider TV http://link.reuters.com/hyr57m

Graphic on BP shares http://r.reuters.com/dez27m

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The BP spokesman said that if a seep is confirmed from the
well, the cap will be lifted and oil flowed to the surface.

The worst oil spill in U.S. history has caused an economic
and environmental disaster in five states along the Gulf Coast,
hurt President Barack Obama’s approval ratings and complicated
traditionally close ties with Britain.

IN THE CROSSHAIRS

BP’s role in the disaster and speculation about any
influence the British oil giant may have had over the release of
the Lockerbie bomber from a Scottish prison last year are sure
to be discussed when British Prime Minister David Cameron meets
Obama in Washington on Tuesday.[ID:nLDE66I0I8]

BP has confirmed that it lobbied the UK government in late
2007 over a prisoner transfer agreement with Libya but said it
was not involved in talks on the release of Abdel Basset
al-Megrahi, convicted of the 1988 bombing of a Pan Am flight.

British foreign secretary William Hague said on Saturday
that there was no evidence BP had any connection with
al-Megrahi’s release.

Cameron’s visit comes at a time when U.S. lawmakers are
considering a range of new rules that could require tougher
safety regulations on offshore drilling or bar companies like BP
from new offshore exploration leases.

The company, which has been in the crosshairs of U.S.
politicians since the spill began on April 20, has started
canvassing shareholders about a restructuring that could include
a breakup of its businesses, the Sunday Times reported.

The paper said options included selling the group’s
refineries and petrol stations, scaling back its U.S. operations
and ramping up in-house engineering instead of outsourcing.

Shares are off nearly 40 percent since the spill began
despite a rally from lows hit on June 25. The recovery has been
prompted by speculation of asset sales and sovereign wealth fund
interest and hopes for the capping of the well.

ANOMALIES IN RESPONSE

U.S. authorities probing the spill are looking into why
workers missed signs of an impending explosion and have drawn up
a list of more than 20 anomalies in the crew’s response to them,
the Wall Street Journal reported. [ID:nN18147158]

The current plan had been for BP to resume siphoning the oil
after the completion of the pressure tests on the well, which
extends 2.5 miles (4 km) under the seabed, to judge if it is
able to withstand the process to seal the leak.

But Doug Suttles, BP’s chief operating officer, said the
company now hopes to keep the damaged well shut until the relief
well is completed in August and the leak is sealed off with
heavy drilling mud and cement.

“We’re hopeful that if the encouraging signs continue that
we’ll be able to continue the integrity test all the way to the
point that we get the well killed,” he told reporters before
Allen issued his statement. “Clearly we don’t want to reanimate
flow into the Gulf if we don’t have to.”

Suttles’ statement could indicate diverging viewpoints
between BP and the U.S. government on plans for the well
integrity test. It prompted Allen — who will ultimately make
the final call on the test — to issue a statement that “nothing
had changed” in the joint plan.

Billy Nungesser, president of Plaquemines Parish in
Louisiana, said the new cap was good news after a three-month
losing battle to try to clean up oil hitting fragile marshlands
as more lapped ashore.

“We’re very optimistic,” Nungesser told the “Fox News
Sunday” program. “We see light at the end of the tunnel. It’s a
very long tunnel but today we’re making progress.”

In Boothville, Louisiana, where a sign on a roadside snack
stand said “Thank you, Jesus, the well is capped,” residents
were happy but frustrated at the economic toll the spill is
taking.
(Additional reporting by Paul Eckert in Washington, Eileen
O’Grady in Houston, Alexandria Sage in Louisiana; Writing by
Sitaraman Shankar; Editing by Hans Peters)

CORRECTED – WRAPUP 1-Investors worry about seepage at capped BP well