BP May Trim GoM Exposure

BP plc (BP) is trying hard to restore its pre-spill image with various strategic initiatives. Following Bob Dudley’s entry as the new chief executive officer (CEO) on October 1, the company is trying to reduce the number of operatorships it holds in the Gulf of Mexico (GoM).

This move is part of the company’s plan to trim the capex budget and rebalance its assets portfolio. Earlier, the company said that it would cut its capital spending by nearly 10% this year to fund the spill costs that touched $11.2 billion as on October 1. BP is also committed to raise up to $30 billion from asset disposal program in the next one and half year.

BP is the largest operator in GoM, producing from approximately 20 deepwater oilfields. Late last week, it offloaded 20% interest in Tubular Bells (a deepwater field discovered in 2003) to Hess Corp. (HES) for $40 million to relinquish its operatorship.

Recently, the company announced its plan to raise cash by selling $3.5 billion debt as it got back an investment grade credit rating (Baa3 by Moody’s Investors Service, the lowest step of investment-grade) after prolonged sluggishness.

The company is well on track with its $30 billion assets sale. So far, it has sold nearly $10 billion worth of assets including a $7 billion sale of onshore gas assets in the U.S., Canada and Egypt to Apache Corp. (APA).

While we believe that restoring the pre-spill image is not a one-day job, the U.K. major is making progress toward this goal.

The new CEO also commented that BP is considering resumption of its dividend payment early next year. BP share price moved up nearly 20% in the last four weeks, though still below the share price before the April 20 accident. As suggested by BP’s share price movement, the company’s recent strategic decisions have gradually helped to revamp its position. Our Neutral recommendation for BP continues with the Zacks #3 Rank (Hold).

BP PLC (BP): Free Stock Analysis Report

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1 Comment on BP May Trim GoM Exposure

  1. BP is about to launch its new BPCares website. In a stunning move by BP last month, they decided to fight fire with their new BPCares website. The first task was to acquire all of the BPCares domains… mission accomplished!
    The domains are as follows:

    Inside sources indicates that the BPCares website will attempt to point critics of BP that the goal moving forward is ‘Beyond Petroleum’, more to ‘Amoco’ for its future.
    The new website will be launched soon.

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