Little Nalco Will Benefit from BP's SpillJessica Resnick Ault
BP's (BP) assault on the growing spill surrounding its runaway well in the Gulf of Mexico has been good news for Nalco (NLC). The suburban Chicago-based company makes the oil-dissolving chemicals, known as dispersants, used to break up the oil slick, and has increased its production by ten times since the incident.
More than 430,000 gallons of dispersant have been used so far in the Gulf. The idea is to break the oil into millimeter-sized chunks that will be absorbed into the water. Some lawmakers and fishing groups have asked the government to determine if the chemicals can cause harm.
Dispersants represent less than one percent of Nalco's revenues. It also makes chemicals that increase the flow of oil through pipelines and in refineries. Shares are up 5.9 percent since May 3.
That's good news for investor Warren Buffett. His Berkshire Hathaway (BRK.A)is Nalco's largest shareholder, with a 6.5% stake.
The bottom line: Business is good for a low-profile company making products that help clean up the oil spill in the Gulf.