Friday, March 22nd, 2013
BP announced today that it intends to carry out a share repurchase, or buy-back, programme with a total value of up to $8 billion.
Today’s decision to buy back shares follows the completion yesterday of the sale of BP’s 50% interest in TNK-BP to Rosneft. The programme is expected to return to BP shareholders an amount equivalent to the value of the company’s original investment in TNK-BP.
In 2003 BP invested around $8 billion in cash, shares and assets in the formation of TNK-BP. Over the following decade BP received a total of $19 billion in dividends from the joint venture. BP sold its interest in TNK-BP to Rosneft, followed by a reinvestment in Rosneft shares, for an overall consideration of $12.48 billion in cash (including $0.71 billion in TNK-BP dividends received by BP in December 2012) together with shares representing 18.5% of Rosneft. As a result, BP now holds a 19.75% interest in Rosneft.
BP Group Chief Executive Bob Dudley said: “BP is moving on to the next phase of its business in Russia, becoming the largest private shareholder in Rosneft, Russia’s leading oil company. In the process we have also released cash, equivalent to at least six years of BP’s anticipated future dividends from TNK-BP. We look forward now to working closely with Rosneft and together developing opportunities to create value for both companies.”
Dudley said that the size of the proposed buy-back programme, which is expected to exceed that required to offset the earnings per share dilution expected as a result of the sale of TNK-BP, also reflected the reduction in BP’s asset base following its major $38 billion divestment programme over the past three years.
BP intends to retain the additional cash consideration of $4.48 billion received from the sale of its interest in TNK-BP to reduce BP Group debt as part of its continuing commitment to maintaining a strong balance sheet.
BP Chairman Carl-Henric Svanberg said: “We expect our stake in Rosneft will generate long-term value for BP and its shareholders. But this buy-back programme should also allow our shareholders to see benefits in the near-term from the value we have realised by reshaping our Russian business.”
Source
Tags: Bob Dudley, BP, Robert Dudley, rosneft, TNK-BP
Posted in BP to Buy Back $8 billion of Shares Returning its 2003 Investment in TNK-BP to Shareholders | No Comments »
Friday, March 22nd, 2013
Key points:
- Rosneft and BP today completed a number of transactions, in line with the terms announced in October 2012. As a result of the transactions:
- o BP receives net $12.48 billion in cash, including a TNK-BP dividend of $0.71 billion, and 18.5 per cent Rosneft shares;
- o Rosneft becomes holder of BP’s 50 per cent interest in TNK-BP in exchange for $16.65 billion in cash and 12.84 per cent of Rosneft shares;
- o OFSC ROSNEFTEGAZ sells 5.66 per cent in Rosneft to BP in return for $4.87 billion in cash;
- Robert Dudley joined the steering committee on TNK-BP integration chaired by Igor Sechin and has been nominated to the Rosneft Board of Directors.
In October 2012 BP and Rosneft announced agreement in principle for the sale and purchase of BP’s 50 per cent interest in TNK-BP for $17.12 billion in cash and 12.84 per cent of Rosneft shares.
Following adjustments in accordance with the terms of the agreement excluding a $0.71 billion dividend received by BP in December 2012 from TNK-BP, Rosneft has today paid BP a final amount of $16.65 billion.
BP has used $4.87 billion of the cash consideration to acquire 5.66 per cent of Rosneft shares from ROSNEFTEGAZ. This amount includes the adjustment from the offer date to completion according to the terms of the purchase agreement.
As a result of these transactions BP has received $12.48 billion net in cash (including the $0.71 billiondividend received in December 2012) and, together with its existing 1.25 per cent shareholding in the company, now holds a 19.75 per cent stake in Rosneft, Russia’s largest oil company.
Commenting on the BP transaction, Rosneft President and Chairman of the Management Board Igor Sechin said: “We are delighted to close this transaction ahead of schedule and would like to thank our partners in BP for their cooperation throughout the process. We welcome BP as a strategic investor in Rosneft and look forward to their involvement in forming the future strategic direction of the company through its representation on the Rosneft Board of Directors.
“We are closing the deal of acquiring BP’s share in TNK-BP earlier than we previously planned and we want to thank our partners from BP for their cooperation throughout the process. We welcome BP as the major shareholder of Rosneft, which will take part in shaping the Company’s strategy though its participation in the Board of Directors.
We hope, that BP’s vast experience will allow us to maximize synergetic effect on several directions during the process of integration. This deal is a part of the current Rosneft strategy aimed at developing cooperation with the world biggest companies. We are sure, that a transition to a new level of our relations will bring benefits not only to Rosneft and its shareholders, but also to Russian oil industry in general.
We are glad that BP has made a decision to remain one of the biggest investors in the Russian economy, thus admitting vast prospects of Russia’s oil and gas industry and Rosneft’s big potential”
BP Group Chief Executive Robert Dudley said: “This is a historic day for BP in Russia. BP has invested in Russia for more than 20 years and for a decade we have been Russia’s largest foreign investor through our involvement with TNK-BP. We aim to continue that success with today’s transaction, which increases our stake in Rosneft and gives us a wonderful opportunity to forge a new partnership with a great Russian oil company.
“We hope to help Rosneft to deliver synergies through its acquisition of TNK-BP and to grow production and reserves through brownfield, greenfield and unconventional opportunities as Rosneft strengthens its position among the world’s leading global energy companies.”
BP Chairman Carl-Henric Svanberg said: “This is the beginning of a distinctive and exciting future consistent with our strategy to invest in Russia and leverage our unique expertise to create value for BP and our shareholders, for Rosneft and for Russia.”
Robert Dudley has been nominated as a candidate to join the Rosneft Board of Directors ahead of completion of the transaction, which underscores the trust of Rosneft’s shareholders. Electing Rosneft Board of Directors members is on the agenda of the Company’s 2012 annual general meeting to be held on June 20, 2013. Mr Dudley is also a member of Rosneft’s steering committee on TNK-BP integration.
Rosneft and BP will now work together to support the integration of Rosneft and TNK-BP, ensuring the implementation of world-leading business and technological approaches.
In addition BP and Rosneft intend to identify possible opportunities for joint work on standalone projects, both in Russia and internationally.
Source
Tags: BP, purchase, rosneft, Sale, TNK-BP, Transaction
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Thursday, January 31st, 2013
Townshend, currently regional president for the company in Iraq since 2009, is replacing David Peattie who will step aside at the end of February.
Townshend, who will report directly to BP chief executive Bob Dudley, has worked for the oil stalwart in Azerbaijan, Nigeria, the Netherlands, Indonesia, US, Australia and the Middle East.
He managed the construction of the 1800-kilometre Baku-Tbilisi-Ceyhan project bringing Azerbaijan’s oil from the Caspian to the Mediterranean and BP’s onshore business in Azerbaijan, Georgia and Turkey including the South Caucasus gas pipeline.
He moved to the Middle East in 2007 to set up BP’s tight gas appraisal project in Oman, before becoming BP president of Middle East and Pakistan.
He was brought into the Iraq job after BP’s successful bid for development of the giant Rumaila field. The project has, however, been hit with problems, mainly associated with bottlenecking, which is forcing a downward revision of production targets.
BP has not said who will replace Townshend in Iraq.
Townshend already has the inside track on the company’s dealings in Russia having become a non-executive director of joint venture TNK-BP in 2011, replacing former BP chief executive Tony Hayward. BP has already agreed to sell its 50% stake in the venture to Rosneft.
Heavily involved in that deal was Peattie who is leaving BP after 34 years, but who will remain on the board of TNK-BP until the sale is finalised.
BP has made a series of senior appointments this week. Production boss Bob Fryar is taking over the safety seat from Mark Bly who is retiring while Alaska operations chief John Minge is taking over as chairman and president of BP America from Lamar McKay who has moved on to lead the British supermajor’s upstream division.
Source
Tags: BP, michael townsend
Posted in Michael Townshend To Become Senior Vice President of Russia BP Group | No Comments »
Friday, January 25th, 2013
British major BP said it is targeting 2018 for the first gas from the second phase of Azerbaijan’s Shah Deniz gas project, a major development aimed at reducing European dependence on Russia for its energy supplies.
Output from Shah Deniz II is expected to reach 16 billion cubic metres (bcm) of natural gas per year, with 10 bcm earmarked for Europe and 6 bcm for Turkey.
Shah Deniz I, which has been pumping gas since 2006, has production capacity of 8 bcm.
Shah Deniz, Azerbaijan’s biggest gas deposit which is being developed by BP, Statoil, Azeri state energy firm SOCAR and others, is estimated to contain 1.2 trillion cubic metres of gas.
If all necessary agreements are achieved, “we will target 2018 for first gas (from Shah Deniz II),” Al Cook, BP-Azerbaijan vice-president, told a news conference.
Officials from SOCAR had said the second phase was expected to start by the end of 2017, but SOCAR head Rovnag Abdullayev said in December the gas would reach European markets “not earlier than the second quarter of 2018.”
The Shah Deniz consortium is expected to choose by mid-2013 whether to transport Shah Deniz II production via the Nabucco-West pipeline or the rival Trans-Adriatic pipeline (TAP).
After a deal signed earlier this month the consortium owns stakes in both pipeline projects.
Cook welcomed ratification by Azerbaijan and Turkey of the linked Trans-Anatolian (TANAP) gas pipeline agreement, which will bring Azeri gas through Turkey to the edge of Europe.
TANAP will connect with either Nabucco West into Austria or TAP, taking a more southern route via Greece and Albania into Italy to reach customers in the European Union.
Cook said the Shah Deniz consortium planned to invest $10 billion on the Shah Deniz II project.
“Over the next 18 months, in 2013 and the first half in 2014 Shah Deniz plans to make commitments to spend $10 billion on this project. BP on behalf of the consortium plans to make commitments to spend $10 billion,” he said.
TAP’s shareholders are EGL AG of Switzerland, which has 42.5 percent, Norway’s Statoil (42.5 percent) and Germany’s E.ON Ruhrgas (15 percent).
Nabucco’s six shareholders are Austria’s OMV AG, Germany’s RWE AG, Hungary’s MOL through its gas pipeline operator FGSZ, Turkey’s Botas, BEH of Bulgaria and Romania’s Transgaz.
Tags: BP, Shah Deniz
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Thursday, December 20th, 2012
Rosneft President and Chairman of the Management Board held a working meeting with BP CEO Bob Dudley to discuss the integration of Rosneft and TNK-BP.
Bob Dudley will become a member of the steering committee co-ordinating the integration that will be chaired by Igor Sechin.
The parties confirmed their commitment to efficient integration of the companies and agreed that the process is a unique opportunity to bring many of the world’s best business and technical practices into the combined company in a short timeframe.
Commenting on the meeting Igor Sechin said: “I am glad to see the progress in our co-operation and am confident that the experience of Bob Dudley and of the BP team will raise the efficiency of the integration process and will ensure the combined company becomes one of the most competitive international majors.”
Bob Dudley said: “BP is committed to Rosneft’s success throughout the integration process and beyond and we see significant potential for profitable partnership between our companies. I would also like to congratulate Rosneft on signing the sale and purchase agreement with AAR. By owning 100 per cent of TNK-BP Rosneft will unlock significant value. I believe that this is a good outcome for AAR, Rosneft and Russia.”
Tags: Bob Dudley, BP, Igor Sechin, rosneft, TNK-BP
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Friday, November 23rd, 2012
A November 20 meeting of the Rosneft Board of Directors reviewed issues relating to the deals with BP. The Board of Directors:
- Approved Rosneft’s participation in TNK-BP Limited and TNK Industrial Holdings Limited;
- Approved Rosneft’s large deal to acquire a 50% stake in TNK-BP Limited and TNK Industrial Holdings Limited from BP for a cash consideration of USD 25.4 billion (subject to variation under conditions set down in the sale and purchase agreement) and 3.04% of Rosneft shares (at USD 8.00 per share);
- Approved the sale of 9.8% of Rosneft shares belonging to RN-Development to BP at a price of USD 8.00 per share for a total cash consideration of USD 8.3 billion (subject to variation under conditions set down in the sale and purchase agreement).
These decisions were taken in accordance with Russian government directives.
Rosneft will acquire a 50% stake in TNK-BP from BP for a cash consideration of USD 17.1 billion and 12.84% of Rosneft shares through these approved deals.
Rosneft and BP have completed the approval process for legally binding deal documents, which are to be signed shortly.
The totals and percentages shown above have been rounded off.
Source: www.rosneft.com
Tags: board, BP, rosneft, TNK Industrial Holdings Limited, TNK-BP
Posted in Rosneft BP deal | No Comments »
Friday, November 23rd, 2012
Rosneft today announces that it has entered into definitive agreements with BP for the purchase of BP’s 50% interest in TNK-BP in exchange for $17.1 billion in cash and 12.84% Rosneft shares currently held in treasury. The completion is subject to regulatory approvals, and is expected to occur in the first half of 2013.
In addition, BP has entered into an agreement to purchase from Rosneft’s parent, Rosneftegaz, a further 600 million Rosneft shares, representing a 5.66% stake in Rosneft. at a price of $8.00 per share.
On completion of the above transactions, BP will hold a 19.75% stake in Rosneft, inclusive of its existing 1.25% interest.
Rosneft is in advanced negotiations with the AAR consortium (Alfa Group, Access Industries and Renova) (”AAR”) of a definitive agreement to acquire AAR’s 50% interest in TNK-BP pursuant to the heads of terms announced on 22 October 2012. If and when a definitive agreement is signed, an appropriate announcement will be made. The transaction with AAR is independent of the transaction with BP.
Source
Tags: aar, Access Industries and Renova, Alfa Group, BP, rosneft, stake, TNK-BP
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Friday, November 16th, 2012
- Resolution of all criminal claims with Department of Justice includes $4 billion paid in installments over a period of five years
- Resolution of all securities claims with Securities and Exchange Commission includes $525 million paid in installments over a period of three years
- Existing $38.1 billion charge against income to increase by approximately $3.85 billion
- BP is prepared to vigorously defend itself against remaining civil claims
BP today announced that it has reached agreement with the United States government, subject to court approval, to resolve all federal criminal charges and all claims by the Securities and Exchange Commission (SEC) against the company stemming from the Deepwater Horizon accident, oil spill, and response.
“All of us at BP deeply regret the tragic loss of life caused by the Deepwater Horizon accident as well as the impact of the spill on the Gulf coast region,” said Bob Dudley, BP’s Group Chief Executive. “From the outset, we stepped up by responding to the spill, paying legitimate claims and funding restoration efforts in the Gulf. We apologize for our role in the accident, and as today’s resolution with the U.S. government further reflects, we have accepted responsibility for our actions.”
In eliminating the possibility of any further federal criminal charges against the company based on the accident, BP has taken another significant step forward in removing legal uncertainty and can now focus more fully on defending itself against all remaining civil claims.
“We believe this resolution is in the best interest of BP and its shareholders,” said Carl-Henric Svanberg, BP’s Chairman. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”
TERMS OF RESOLUTION
As part of the resolution, BP has agreed to plead guilty to 11 felony counts of Misconduct or Neglect of Ships Officers relating to the loss of 11 lives; one misdemeanor count under the Clean Water Act; one misdemeanor count under the Migratory Bird Treaty Act; and one felony count of obstruction of Congress. This resolution is subject to U.S. federal court approval.
Thirteen of the 14 criminal charges pertain to the accident itself and are based on the negligent misinterpretation of the negative pressure test conducted on board the Deepwater Horizon. BP acknowledged this misinterpretation more than two years ago when it released its internal investigation report. Today’s agreement is consistent with BP’s position in the ongoing civil litigation that this was an accident resulting from multiple causes, involving multiple parties, as found by other official investigations. The remaining criminal count pertains to two BP communications made to a member of Congress during the spill response about flow rate estimates. As part of its resolution of criminal claims with the U.S. government, BP will pay $4 billion, including $1.256 billion in criminal fines, in installments over a period of five years. BP has also agreed to a term of five years’ probation.
Under the resolution with the Department of Justice (DOJ), a total of $2.394 billion will be paid to the National Fish & Wildlife Foundation (NFWF) over a period of five years. In addition, $350 million will be paid to the National Academy of Sciences (NAS) over a period of five years.
Pursuant to the terms of the plea agreement, BP has also agreed to take additional actions, enforceable by the court, to further enhance the safety of drilling operations in the Gulf of Mexico. These requirements relate to BP’s risk management processes, such as third-party auditing and verification, training, and well control equipment and processes such as blowout preventers and cementing. In addition, BP has agreed to several initiatives with academia and regulators to develop new technologies related to deepwater drilling safety.
The resolution also provides for the appointment of two monitors, both with terms of four years. A process safety monitor will review, evaluate and provide recommendations for the improvement of BP’s process safety and risk management procedures concerning deepwater drilling in the Gulf of Mexico. An ethics monitor will review and provide recommendations for the improvement of BP’s Code of Conduct and its implementation and enforcement.
Under U.S. law, companies convicted of certain criminal acts can be debarred from contracting with the federal government. BP has not been advised of the intention of any federal agency to suspend or debar the company in connection with this plea agreement. BP will continue to work cooperatively with the debarment authority.
In its resolution with the SEC, BP has resolved the Commission’s Deepwater Horizon-related claims against the company under Sections 10(b) and 13(a) of the Securities Exchange Act of 1934 and the associated rules. BP has agreed to a civil penalty of $525 million, payable in three installments over a period of three years, and has consented to the entry of an injunction prohibiting it from violating certain U.S. securities laws and regulations. The SEC’s claims are premised on oil flow rate estimates contained in three reports provided by BP to the SEC during a one-week period (on April 29 and 30 and May 4, 2010), within the first 14 days after the accident. This resolution is subject to U.S. federal court approval.
“Since the spill, we have worked hard to rebuild confidence in the company,” said Mr. Dudley. “We take seriously not only our commitment to safety and operational excellence but also our communications with stakeholders, including the public, the government and our investors.”
FINANCIAL IMPLICATIONS OF RESOLUTION
The aggregate amount of the resolution is approximately $4.5 billion, with payments scheduled over a period of six years. As of the end of September 2012, BP’s financial statements recorded a charge taken against pre-tax income in relation to the accident and oil spill of $38.1 billion. This charge included $525 million provided for the SEC settlement. Today’s resolution is expected to result in an increase of approximately $3.85 billion to the $38.1 billion charge taken against income as of the end of September. BP’s financial statements as of the end of December 2012 will reflect this additional charge, as well as any other adjustments arising during the fourth quarter. It is anticipated that the cash outflows can be met within BP’s current financial framework. A summary payment schedule is attached to this release.
LOOKING FORWARD
BP will continue to vigorously defend itself against all remaining civil claims and to contest allegations of gross negligence in those cases. The remaining claims include: federal civil claims, including those arising under the Clean Water Act; federal and state Natural Resource Damages claims; private civil claims pending in MDL 2179 that were not covered by the settlement with the Plaintiffs’ Steering Committee (PSC); private securities claims pending in MDL 2185; state economic loss claims; and miscellaneous private civil claims pending in other federal and state courts. BP believes that today’s agreement is consistent with its legal position that it was not grossly negligent. All the pleas related to the accident itself are based on no more than negligent conduct.
“From the outset, we made a commitment to clean up the spill and pay legitimate claims – and we’ve been fulfilling that commitment ever since,” said Mr. Dudley. “As we move forward, we are preparing to defend ourselves in court on the remaining claims. We are open to settlements, but only on reasonable terms.”
A SAFER, STRONGER BP
BP has taken significant steps to further enhance safety and risk management throughout its global operations. It launched an internal investigation immediately after the accident, publicly released the results, and has been implementing all 26 of the investigation’s recommendations. BP has also, among other things, made key leadership changes, reorganized its upstream business, created a centralized Safety and Operational Risk organization, and adopted new deepwater drilling standards in the Gulf of Mexico that exceed current regulatory requirements. BP has shared what it has learned with industry and regulators around the world.
“We are committed to building a safer, stronger BP,” said Mr. Svanberg. “This work did not begin with the Deepwater Horizon accident and will not end with today’s resolution.”
Over the past five years, BP has invested more than $52 billion in the United States – more than any other oil and gas company, and more than it invests in any other country where it operates. The company employs 23,000 Americans and supports nearly a quarter of a million American jobs.
On top of this business investment, BP has to date spent more than $14 billion in operational response and clean-up costs. BP continues to monitor the Gulf and its shoreline, and the company has supported regional tourism, promoted Gulf seafood, and committed $1 billion to early restoration projects. BP also quickly set up a process to pay all legitimate claims and established a $20 billion Trust to assure Americans that the resources to pay claims, settlements, and other costs would be there. To date, BP has paid more than $9 billion to individuals, businesses and government entities and has already agreed to a settlement with the Plaintiffs’ Steering Committee, resolving the substantial majority of outstanding private economic loss, property damage and medical claims, which BP estimates will cost approximately $7.8 billion.
Tags: Accident, Bob Dudley, BP, chief executive, deepwater, Deepwater Horizon, Resolution
Posted in BP Deepwater Resolution | No Comments »
Tuesday, November 13th, 2012
BP and AAR, joint shareholders in TNK-BP, today announced that they have reached a comprehensive agreement to settle all outstanding disputes between them, including the current arbitrations brought by each against the other.
The agreement includes an immediate waiver of the new opportunities provision in the TNK-BP shareholder agreement, allowing each party to explore new opportunities and partnerships in Russia and the Ukraine, effective immediately.
The parties have agreed to work constructively together with each other and with Rosneft to progress their respective disposals of their shareholdings in TNK-BP.
Source: bppress@bp.com
Tags: aar, Agreement, BP, shareholder agreement, TNK-BP
Posted in BP AAR Settlement | No Comments »
Wednesday, October 31st, 2012
BP today announced its financial results for the third quarter of 2012, reporting underlying replacement cost profit, adjusted for non-operating items and fair value accounting effects, of $5.2 billion. It also announced an increase in its quarterly dividend to 9c per share – an increase of 12.5 per cent – expected to be paid in the fourth quarter.
- Underlying 3Q 2012 replacement cost profit $5.2 billion; a 40 per cent increase on previous quarter.
- Increases quarterly dividend by 12.5 per cent, to 9c a share, payable in 4Q 2012.
- On track for delivery of strategic 10-point plan to 2014.
- Plans to deliver long-term free cash flow growth; focusing and de-risking the portfolio and increasing investment in upstream.
In a call with financial analysts later today, the company will also provide an update of progress against its strategic 10-point plan for 2014, and outline its future direction.
“BP’s performance and the strong progress we are making in transforming the company give us the confidence to increase distributions to our shareholders,” said group chief executive Bob Dudley. “We are on track with our strategy to 2014 and are laying the right foundations for sustainable growth during the coming decade.”
BP expects to generate future growth through increased investment in new upstream projects in higher-margin areas and through new access and exploration. BP’s business portfolio is expected to become more tightly focused around its strong existing positions and its key operating strengths.
3Q 2012 Results
Third quarter underlying replacement cost profit was $5.2 billion, compared to $3.7 billion reported for the previous quarter and $5.5 billion for the third quarter of 2011, which was prior to a number of significant divestments.
The quarter’s results benefited from a strong performance in BP’s downstream business, where good operational delivery capitalised on increased refining margins. In the upstream, performance was similar to the second quarter as increased production from new projects and completion of turnarounds in the Gulf of Mexico was offset by seasonal maintenance in North Sea and Alaska and the impact of Hurricane Isaac in the Gulf. In addition, more stable oil prices in the third quarter resulted in some positive reversal of the unusual price effects seen in the second quarter earnings, such as Russian duty lag.
Operating cash flow in the quarter was $6.3 billion. At the end of the third quarter, gearing was 20.9 per cent compared to 21.9 per cent at the end of the previous quarter. Gearing is expected to reduce as the company works to complete the divestment programme and ends payments into the $20 billion Trust Fund.
Production of oil and gas, excluding TNK-BP, was 2.26 million barrels of oil equivalent a day (mmboed), broadly similar to the second quarter and 3 per cent lower than a year ago. Production is expected to increase in the fourth quarter as the maintenance season completes and the benefit of new projects continues, but offset partially by the timing of Gulf of Mexico and North Sea divestments expected to complete in the fourth quarter. BP’s share of TNK-BP production in the quarter was 1mmboed, slightly more than in the same period last year.
BP’s downstream segment delivered record quarterly underlying earnings. Strong operational performance in the fuels business – with refining throughputs at the highest level for seven years – captured the benefits of the quarter’s notably high refining margins. Contributions from supply and trading also returned to more normal levels. Refining margins are expected to decline in the fourth quarter in line with seasonal trends. Refining throughput is also expected to be lower due to turnarounds and the start of a transitional outage to replace the largest of three crude units at our Whiting refinery, as part of the major upgrade project.
Strategic Progress
On October 22, BP announced that it had agreed heads of terms to sell its shareholding in TNK-BP to Rosneft for a mixture of shares and cash. Combined with BP’s existing 1.25 per cent shareholding, the proposed sale would result in BP holding a 19.75 per cent interest in Rosneft and receiving $12.3 billion in cash. The parties currently anticipate the proposed transaction to complete in the first half of 2013, subject to certain customary closing conditions including governmental, regulatory and antitrust approvals.
“Rosneft is a great company with great opportunities,” said Dudley. “I believe our agreement will remove considerable uncertainty for our shareholders about BP’s future in Russia and will secure for BP a valuable and truly distinctive position in one of the world’s largest and most important oil and gas provinces.”
As set out in the 10-point plan, BP expects to bring 15 new major upstream projects into production by the end of 2014, 11 of which are in four higher-margin areas: the Gulf of Mexico, Angola, Azerbaijan and the North Sea. All of these projects are on track.
With the start of production from the Devenick field in the North Sea in early October, three of the six projects scheduled for start-up in 2012 are now on line; the remaining three are expected to start up before the end of the year. In the downstream, the Whiting refinery modernisation programme remains on schedule to start-up in the second half of 2013.
As it moves beyond 2014, BP expects to increase its investment into the upstream to drive development and growth in higher-margin areas and sustain the pace of new access and exploration.
Since early 2010 BP has accessed twice the new acreage it had accessed in the previous nine years, creating a much larger exploration prospect inventory. This has also increased the company’s exposure to new exploration areas outside areas of traditional focus; half of the prospect inventory is now in new plays and half in proven plays in known basins.
Nine exploration wells are expected to be completed in 2012, increasing to 15–25 exploration wells a year going forward. Between 2012 and 2015, BP’s drilling programme is expected to test 15 new plays, in addition to deepening in existing core areas.
BP’s portfolio of world-class downstream businesses has been focused over recent years through significant portfolio rationalisation and investments, including the Whiting upgrade project. With this repositioning expected to be largely complete by the end of next year, the downstream is expected to become significantly more free cash flow generative, delivering material and growing cash to the Group.
BP will continue to reshape and focus its business portfolio around its key operating strengths. Since the end of the second quarter BP has announced agreements for divestments with a total value of over $11 billion, including for the Texas City and Carson refineries and associated assets and a number of non-strategic deepwater fields in the Gulf of Mexico. Since the start of 2010 BP has now announced disposals for a total of over $35 billion against its target of $38 billion; this does not include the proposed transaction with Rosneft for the sale of BP’s share in TNK-BP.
“This highly successful divestment programme is about fundamentally reshaping and repositioning our upstream portfolio. It gives BP a differentiated competitive position which plays to our strengths in exploration, deepwater fields, giant fields and gas value chains. It is also biased to oil, which we believe has higher returns potential,” said Dudley.
BP expects to make a final payment of $860 million into the $20 billion Gulf of Mexico Trust Fund in the fourth quarter of 2012. At the end of the third quarter, the cash balances in the Trust Fund and the Qualified Settlement Funds amounted to $10.9 billion, with $19.1 billion contributed and $8.2 billion paid out.
In its results stock exchange announcement also issued today, BP included an update on the status of the legal proceedings related to Gulf of Mexico oil spill.
The US Department of Justice (DoJ) has been conducting an investigation into the Gulf of Mexico oil spill regarding civil and criminal laws. BP is in ongoing discussions with the DoJ and other federal agencies regarding a possible settlement of these claims and whilst it is ready to settle on reasonable terms, a number of unresolved issues remain and there is significant uncertainty as to whether an agreement will ultimately be reached. BP has repeatedly said that it is willing to settle on reasonable terms but otherwise continues to prepare vigorously for the start of trial MDL 2179, now scheduled for late February 2013.Bob Dudley concluded: “BP is becoming a tightly-focused oil and gas company. I am confident we will be well-positioned to grow long term sustainable free cash flow and create value for our shareholders.”
Tags: 2012, BP, Dividends, results, Third Quarter
Posted in BP Reports Strong Third Quarter Results | No Comments »
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