March 28, 2024

BP to Buy Back $8 Billion in Shares

The British oil company completed the sale of its stake in the venture, TNK-BP, to Rosneft, the Russian state oil company, on Thursday for $12.48 billion in cash and shares in Rosneft. The deal will give BP a 19.75 percent holding in Rosneft.

The $8 billion is roughly the equivalent of what BP originally paid for 50 percent of TNK-BP in 2003. Over the last ten years BP also received $19 billion in dividends from TNK-BP, the company said.

BP said that the remaining $4.48 billion from the stake sale would be used to reduce debt.

The company’s chief executive, Robert W. Dudley, said in a statement that the buyback was expected to exceed what was required to offset the earnings per share dilution as a result of the TNK-BP sale.

He said the buyback also reflected the reduction in BP’s size following its $38 billion in divestments, excluding TNK-BP, over the last three years. BP has been on a selling spree as part of an effort to raise cash to pay for liabilities resulting from the 2010 Gulf of Mexico oil spill that killed 11 people and spewed millions of barrels of crude oil.

At a news conference Thursday at BP’s headquarters in London, the two companies announced that Mr. Dudley would be nominated to join the Rosneft board. BP will also have an additional board member. Rosneft on Thursday also bought the other 50 percent of TNK-BP from a group of Russian oligarchs for $27.7 billion.

An ebullient Igor Sechin, Rosneft’s chief executive, said that the two companies were already looking into what projects BP could work on with Rosneft. “We are going to work definitely with BP offshore, “ he said. “We are definitely going to avail ourselves of the experience and competencies of BP.”

Mr. Dudley said that Mr. Sechin had gone without sleep for roughly 40 hours straight completing the transaction.

He said that the global oil and gas industry was changing and that new technologies gave Russia the opportunity to exploit “more expensive” to develop resources like “offshore oil, shale gas, and tight oil, which is produced using similar techniques to shale gas.

Mr. Dudley suggested that he was not troubled by the fact that Rosneft already has important strategic ventures in the Arctic with ExxonMobil, Statoil and Eni. “We all applaud Russia’s progressive approach of strategic ties with international oil companies,” he said.

As a significant minority shareholder in Rosneft, BP will benefit from these ventures, Mr. Sechin said.

Article source: http://www.nytimes.com/2013/03/23/business/global/bp-to-buy-back-8-billion-in-shares.html?partner=rss&emc=rss

DealBook: BP to Sell Canadian Natural Gas Unit for $1.67 Billion

A BP gas station in Romford, Britain.Chris Ratcliffe/Bloomberg NewsA BP gas station in Romford, England.

LONDON – BP agreed on Thursday to sell its Canadian natural gas liquids business to Plains All American Pipeline for $1.67 billion as BP continues to streamline its operations and bolster its balance sheet.

The cash sale is part of BP’s plan to raise $45 billion by selling assets and businesses to strengthen its finances in the wake of the Gulf of Mexico oil spill disaster last year. BP said it would remain active in Canada.

“Canada remains an important part of our portfolio of growth opportunities to meet North America’s energy needs,” Robert Dudley, BP’s chief executive, said in a statement.

The company has already agreed to sell about $20 billion in assets. In November, BP increased its sales goal to $45 billion, including the disposal of half of its American refining capacity in the Carson and Texas City plants. BP had set aside $40 billion to pay for costs related to the Gulf oil spill.

In November, BP’s $7.1 billion deal to sell a majority stake in the Argentine oil producer Pan American Energy to the Bridas Corporation fell through. Bridas, a joint venture between Bridas Energy of Argentina and Cnooc of China, withdrew its offer because certain conditions were not met.

The Canadian natural gas liquids business, which employs about 450 people, includes plants and storage facilities, BP said. It owns assets that gather, store and distribute natural gas liquids in Canada and the Midwest.

The sale to a Canadian unit of Plains All American Pipeline, which is based in Houston, is expected to be completed by June, subject to necessary government and regulatory approvals. Credit Suisse advised BP on the transaction. Barclays Capital advised Plains All American Pipeline.

“BP’s Canadian N.G.L. business is an asset-rich platform that significantly expands our L.P.G. asset footprint,” Greg L. Armstrong, chairman and chief executive of Plains All American, said in a statement. It is “a supply-based complement to our existing demand-focused business and making PAA one of the largest L.P.G. service providers in North America,” he said.

Article source: http://dealbook.nytimes.com/2011/12/01/bp-to-sell-canadian-gas-group-for-1-67-billion/?partner=rss&emc=rss

BP Profit Falls as Costs of Gulf of Mexico Spill Outweigh Higher Oil Prices

But there are signs that the high prices have started to hurt demand in the United States and other developed countries, which could start pushing prices down again. Lower prices could make the rest of 2011 more difficult for BP and other big oil companies.

BP’s rivals, including Royal Dutch Shell and Exxon Mobil, are still expected to report strong results when they release their first-quarter performances on Thursday.

But some analysts said oil prices could drop about $20 a barrel in the near term, raising questions about whether such companies could keep up the stellar profit growth of last year.

“Concern about supply might fade, and there is a possibility that the world economy will slow,” said Julian Jessop, chief international economist at Capital Economics in London.

But “the future is still bright for oil companies,” he added. “Oil prices will fall back but remain historically high.”

An improving world economy returned oil prices to higher levels in 2010 after a sharp drop in 2009. Exxon Mobil, the largest American oil company, reported a 53 percent increase in profit for the fourth quarter of last year. Chevron earnings in that period rose 72 percent, and ConocoPhillips reported a 46 percent rise.

On Wednesday, BP was the first of the largest publicly traded oil companies to report first-quarter earnings.

For BP, a higher oil price was offset by asset sales to pay for the repercussions from the Gulf of Mexico oil spill. Earnings were $5.48 billion in the first three months of this year, down from $5.6 billion in the period a year earlier.

The company has sold more than $24 billion of assets to raise money to cover the oil spill costs. Production fell as a result. Including lost production from the Gulf accident, production fell 11 percent in the first quarter from a year earlier.

BP set aside an additional $384 million for the oil spill in the first quarter, bringing the total to $41 billion.

BP’s shares have fallen 23 percent in the last 12 months, while those of its largest competitors have risen at least 18 percent.

To win back investors, the company focused on exploration and signed cooperation agreements in India and Russia. But its Russian deal with the government-owned Rosneft was held up this year because of a legal challenge from its Russian shareholders. Russia has surpassed Saudi Arabia as the biggest oil producer in the world. New oil from the region could play an important part in ensuring sufficient supplies and the future level of oil prices.

Those analysts who predicted a decline in the price of oil said concerns about political tensions in North Africa and the Middle East had increased prices but were likely to fade. At the same time, there are signs that high oil prices discourage consumers from filling their tanks just as the summer vacation season starts in the northern hemisphere.

“The oil price is, to an extent, too high at the moment,” said Christopher Wheaton, a director at the asset management firm RCM in London. “We are at the point at which we get demand destruction.”

Still, oil prices are expected to remain high enough for companies to increase investments in drilling aimed at raising production in the longer term. Exxon Mobil said last month that it planned to spend about $100 million a day for the next six years on new oil and gas projects.

The drilling for reserves in more remote and harder-to-reach areas has increased costs for oil companies as they compete for talent and technology. The Gulf of Mexico oil spill also led regulators to tighten safety rules and delay decisions on exploration permits, often further increasing costs for oil companies.

One year after the rig explosion that led to the spill in the Gulf of Mexico, BP is still seeking to resume drilling in the region’s waters, and investors continue to wait for BP to give a total figure for the costs of the spill.

Article source: http://feeds.nytimes.com/click.phdo?i=f485bfb51b24d420c4353342ae63a3d9