Investors worry about seepage at BP well

HOUSTON/LONDON (Reuters) - Shares of energy giant BP Plc dropped on Monday amid concerns about seepage at its capped Gulf of Mexico oil well as speculation grew about assets the company may sell to pay the multibillion-dollar costs for the spill.

BP shares, which have rallied over the past three weeks, dropped as much as 5 percent after the top U.S. government spill official said engineers had detected seepage on the floor of the Gulf after the well was capped on Thursday.

The seepage could signal that the April 20 blowout that preceded the leak damaged the wellbore, which could allow oil and gas to leak out the sides and possibly breach the seabed.

Officials are monitoring the pressure in the well to gauge whether it is structurally sound. An intact well would help when a relief well intercepts and tries to plug the leak, but damage could complicate that effort.

BP shares in New York were down 4.9 percent in early afternoon trade after closing down 4.74 percent in London.

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.

A BP spokesman said the seepage was detected by its engineers but it was unclear whether the source was the blown-out well, adding that seepage was 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 cleanup the millions of barrels of spilled oil.

It has also impacted finances of BP, which has begun canvassing shareholders about a restructuring that could include a breakup of its businesses, the Sunday Times reported.

BP's talks to sell half its stake in Alaska's Prudhoe Bay oil field to Apache Corp, which had stalled over the weekend, were back on, CNBC reported.

As part of a test of the well, BP choked off the flow a mile under the water's surface with a cap last Thursday, marking the first time oil has not spewed since the April 20 explosion on an offshore rig killed 11 workers.

The company was extending the test in 24-hour intervals, pending U.S. government approval. The latest extension is until Monday afternoon.

Investors were concerned about reports of the seepage and confusion over how significant it might be.

"There's a little bit of confusion regarding the leak, people are worried about that," said Robert Lutts, chief investment officer at Cabot Money Management in Salem, Massachusetts. "There's been mixed signals provided through the company announcements about how significant the leak is."

National Incident Commander Admiral Thad Allen, who has final say on whether the test can continue, sent a letter to BP over the weekend demanding answers to unanswered questions about monitoring systems on the well.

Allen mentioned the seepage in a statement issued early on Monday and has said government scientists "got the answers they were seeking."

White House energy adviser Carol Browner told CBS's "The Early Show" the seepage was found less than 2 miles from the well.

"Pretty safe to say that if oil was billowing from the seafloor near the wellbore, the Coast Guard wouldn't be telling BP to proceed/monitor. They'd be saying 'stop the test right now!'" Houston energy investment firm Tudor Pickering Holt & Co said in a note to investors on Monday.

DIVERGING VIEWS?

The BP spokesman said that if seepage is confirmed from the well, a valve on the cap will be reopened, allowing crude to flow into the ocean again.

On Sunday Doug Suttles, BP's chief operating officer of exploration and production, told reporters that the company hopes to keep the damaged well shut until a relief well intercepts it and plugs the leak by mid-August.

But Allen said last week that when the test ends, BP would "immediately" move to begin siphoning oil again to a pair of oil-capture vessels and move to a larger four-vessel siphoning system as planned by the end of July.

Suttles' statement could indicate diverging views between BP and the U.S. government. Yet BP has repeatedly said the final say of how BP proceeds lies with Allen.

Browner said in an interview on ABC's Good Morning America program: "If anything changes we can move rapidly to open parts of the cap and release the pressure in the event that is necessary."

"Nobody wants to do that. Absolutely not ... Clearly we want this to end but we don't want to enter into a situation where we have uncontrolled leaks all over the Gulf floor."

Browner acknowledged that there had been some tension between BP and the government, particularly over requests for additional monitoring but said concerns had been resolved.

ROLE OF BP IN LIBYA BOMBER DEAL

The oil spill is likely to loom large when British Prime Minister David Cameron meets Obama in Washington this week.

The company's role in the release of the Lockerbie bomber from a Scottish prison last year may also come up.

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.

The British government said it had no plans to re-examine a prisoner transfer agreement with Libya, despite demands by U.S. lawmakers for an investigation.

Cameron's visit comes as 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.

BP is also trying to figure out a possible restructuring of its business.

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

Oilfield services company Halliburton, which did the cement work on the BP well, posted a better-than-expected 83 percent jump in quarterly profit on Monday, sending its shares up nearly 5 percent. Halliburton said it expects U.S. onshore work to offset the impact of a deepwater stoppage that followed the Gulf of Mexico oil spill.

(Additional reporting by David Alexander in Washington, Matthew Lynley in New York, Alexandria Sage in Louisiana; Writing by Deborah Charles; Editing by Eric Beech)