BP Looks Like a Relative Bargain

Tickers in this article: BP COP CVX RDS-A XOM

NEW YORK ( TheStreet) -- I don't believe there was a company more hated than BP following its 2010 Gulf of Mexico rig explosion that caused 200 million gallons of crude oil to make its way across 16,000 total miles. Although, there were only 11 reported deaths, 8,000 animals lost their lives. Not to mention, the hardship the spill caused many residence of Louisiana and Mississippi, among other places.

This was -- without a doubt -- a disaster. But I don't believe it warranted the death sentence that many BP opponents demanded. It seems unfair to vilify BP and not Exxon Mobil , whose oil tanker, Exxon Valdez, spilled 11 million gallons of crude in Prince William Sound in Alaska in 1989. Besides, it wasn't as if BP employees intentionally laced the rig with dynamite that caused the explosion and the subsequent spill.

For that matter, BP recently absorbed close to $40 million in charges in the recent quarter and taken in almost $300 million year to date in charges. What's more, management has been working diligently to sell off $38 billion worth of assets to finance clean-up costs which have risen to more than $40 billion. Yet, the Street still seems unsure about BP's future. But given that the company has settled the majority of its litigation concerns, the situation is not as murky as it once was.

Bears will insists that I've become a BP apologist. But the other side of the coin shows that the company has handled the situation better than most pundits believed it would. BP management has accepted responsibility for the spill and has made no excuses for the damage it has caused. Not only has BP set up a $20 billion fund to pay disaster victims, but the company has also agreed to pay an additional $4 billion in criminal charges.

And while these shares have rebounded from that horrific event, including gains of 17% year to date, BP stock is still down more than 20% since May 2010. Even with the 15% gains the stock has enjoyed over the past two months, BP shares trade at a price-to-earnings ratio that is half that of both Exxon and ConocoPhillips . Not to mention, the valuation is 3 points lower than Chevron .

What this means is that, as BP management is working to move the company forward, the Street is still hanging on to the past. I do realize my glass-half-full view here can go only so far. Cheap price or not, it's going to take much more than an attractive P/E for these shares to catch up to their peers. Fairly or unfairly, BP has to consistently outperform the other oil and gas majors to earn investors' respect. To that end, BP's third-quarter performance was a great start.