BP shares tick upwards as talk of sovereign wealth saviour continues

BP's share price hit a two-week high this morning after the company categorically rejected speculation that it could hold a share issue to raise funds to cover the cost of the Gulf of Mexico oil spill.

Any share issue would prove dilutive to existing shareholders and spark further speculation about the company's future.

However, a spokesman for the company told Reuters that there were "no current plans to issue new equity".

"We're always happy to welcome new shareholders or existing shareholders who wish to increase their holdings but there are no plans to issue new equity to anyone," he added.

However, BP declined to comment on growing speculation that it was in talks with Sovereign Wealth Funds in the Middle East, in a move that could see a number of funds buy a stake in the company to effectively protect it from hostile takeover bids from rival oil firms.

A number of newspapers reported over the weekend that the company had held talks with sovereign wealth funds from Abu Dhabi, Kuwait, Qatar and Singapore.

The company refused to comment on the reports, but sources have said that the company is now actively seeking an investor that could protect it from takeover bids from the likes of Total or Exxon.

The news prompted BP's share price to rise 3.7 per cent this morning. However, its future is not yet completely assured, with the eventual scale of the costs associated with the Gulf spill likely to rest on the success of current efforts to cap the leaking well.

The company is reported to be on schedule to try to cap the leak using a relief well in the next month, although engineers have warned that it remains a high-risk operation.

Work to complete the relief well could also yet be disrupted by the start of hurricane season. One tropical storm has already developed in the Gulf and the US National Hurricane Center warned yesterday that an area of weather in the southeastern Gulf of Mexico could develop into a hurricane.

Meanwhile, the Times reported today that officials from the Department of Business and Treasury were working on contingency plans to designed to minimise the impacts should BP collapse.