Nalco Holding’s shares rise after BP cleanup news

Posted May 3, 2010 at 11:35 a.m.

Dow Jones Newswires | Shares of Nalco Holding Co. leapt Monday on the news that oil giant BP is planning
to use the company’s chemicals to help clean up the massive oil spill
in the Gulf of Mexico.

Nalco, which is based in Naperville, makes a dispersant chemical that will help break down the
oil. Its shares jumped 18 percent to $29.25, hitting its highest point since October 2007. Other companies with possible roles in the cleanup also climbed Monday,
including Clean Harbors Inc. BP said it will pay the costs to clean
up the spill.

Jefferies analysts said in a Monday note that the potential boost to Nalco’s earnings is small, somewhere under 5 cents a share, but it was likely the shares would rally on the positive headlines. Jefferies said reports were that BP, which owned the Deepwater Horizon well that was the site of a deadly explosion last month and continues to leak oil into the Gulf, has purchased all of Nalco’s available inventory of the chemical.

Nalco wasn’t immediately available for comment.

The Jefferies analysts said Nalco wouldn’t likely be the only supplier of the chemicals as they are made by many other firms, including BP itself. But they said it could lead to somewhere between $35 million and $80 million in sales, or about 1 percent to 2 percent of total Nalco revenue.

The oil spill could be leaking 25,000 barrels a day, five times the government’s current estimate, industry experts say. Basing their calculations on government data and standard industry measurement tools, the experts say the Gulf spill may already rival the historic 1969 Santa Barbara, Calif., and 1989 Exxon Valdez disasters.

Meanwhile, Clean Harbors was raised to outperform from neutral by Credit Suisse analysts who said the market is underestimating the clean-up work the hazardous waste and environmental-services company may see.

“This is not one-time in nature, and given the magnitude of the disaster it will likely result in an earnings stream for a couple of years rather than a one-time event,” the analysts said.

Clean Harbors climbed 8.9 percent to $69 in recent action, hitting its highest point since September 2008.

Newpark Resources Inc., which provides oil and gas exploration services and manages environmental and waste products from them, leapt 9 percent to $7.28 in recent trading, also at their highest levels since September 2008.

And other specialty chemical companies with water treatment options also rose slightly, including Ashland Inc. up 2.3 percent to $60.94, Arch Chemicals Inc. up 3.9 percent to $35.34 and Eastman Chemical Co. up 0.4 percent to $67.20.

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  1. John in Glenview May 3, 2010 at 5:28 pm

    Yet another proof that the market was, is and will be controlled by big funds with great software programs to play the market one way or another for a penny or two.
    NALCO has:
    138 million shares outstanding
    19 million shares traded today
    918,000 was the “historical” average volume
    86% of the shares are “institutional owned”

  2. Sigolf Leonhard May 11, 2010 at 9:32 a.m.

    The oil disaster is crazy because the leak is so deep. I hope BP do all against the spread of the oil. The nature will be destroyed for a long time.