May be it’s just me, but the recent announcement by shell that it is not in ‘actively’ considering any take over and thereby invoking a 6 month FTSE rule baring it from such (subject to various qualifying criteria) is actually more a statement of intent that it likely will in due course. Oil price did little with the recent Middle East fracas which might suggest harder times to come with lower oil price pressure….more than evens chance that our market cap will be even less than than its paltry 57bill in 6 months…..we are a fish flapping in the surf right now and the tide is going out. Sigh.
6 replies (most recent on top)
That’s the point, keep the debt high so that no one would buy.
@OP
Everyone is saying that it would be easy to buy as a whole and sell off the “fat” to pay debt and keep the good stuff. Here is the issue with this:
- As everyone has said, as soon as someone buys us, they automatically assume our debt, and with the current markets, do you think that the new company would want to take the risk (calculated or not) to add that debt to their books? The problem is, they will have to carry that until they sell off enough assets to make it whole.
- Some of the things that we are currently trying to sell off now no one wants! Look at the wind division, with regard to the US. It’s been for sale for what? 2 years and no one wants it?
- Look at refining, and let’s focus on the 2 biggest ones in the US (Whiting and Cherry Point) if we decide to sell those off. Cherry Point is a good place and is doing its best, you could most likely find someone to buy that one. Whiting on the other hand, is literally a sh-t show that no one wants to touch and if you ask the local population in the area, they would prefer it shut down. It is an aging infrastructure that is constantly needing to be overhauled (which some of this is normal) but, how long will we keep it afloat before the next Texas City?
- Now Drilling, Completions (our bread and butter), look at the North Sea. It has aging infrastructure, again, a lot of projects are being delayed or cancelled (including the whole new “Carbon Capture” initiative. We first were reporting that ~ 200k bbls a day was coming from the combined fields, but that haas been downgraded to ~130k bbls a day.
Compare that to the ~320k bpd oil AND 28b meters of gas that AGT is producing and then the ~400k bpd oil and ~200mm meter of gas that GoM is producing. Why keep investing in the North Sea? So now, we decide to sell it off, but who would want it? Aker BP? They already bought the best North Sea real estate we had when we did the split with them?
Food for thought.
On of the criteria is that the board approves. It was just a premature. I think bp stock will be in the 40s either way with all the increased production.
Ok I'll bite... Why would you buy all of it expending capital or reducing dividends to fund it and then try to sell it when buyers know you really don't want it. No better way to get a deal than knowing you've a motivated seller on the other side of the table.... Additionally the size of the bid would be a significant strain on the balance sheet until the parts were sold.
You're making it sound like it's as easy as a yard sale. That's not how markets work...
@a2 because, unlike the saying goes, bp as a whole is far less than the sum of its parts. The US business alone is considered to potentially be worth 82bill. Take over, keep what you want, sell the dross, pay off the debt and massively increase your production and reserves in one fell swoop. That’s why.
No-one wants the whole company. Shell's gearing is 18% and ours is about 40. Why would anyone want to take that on?