BP battles for its independence amid takeover talk

Daily Mail​

5 hours ago

BP is determined to preserve its status as an independent UK-listed oil company amid speculation that a sinking share price and uncertainty over leadership could push it into an unwanted merger.
The firm's shares have plunged 22 per cent over the past year (see chart). With a market value of just £56 billion, it is seen as a tempting bid target for one of the US oil giants or a British bid from Anglo-Dutch rival Shell.
Predators see the temporary power vacuum caused by the impending departure of chairman Helge Lund as a vulnerability.
An urgent hunt for a strong replacement is being led by Amanda Blanc, BP's senior non-executive director, who is also boss of the insurer Aviva.
BP is seeking to convince investors that it can dial down the radical green transition led by former boss Bernard Looney by embracing an aggressive drilling and cost cutting agenda.
Chief executive Murray Auchincloss, former finance director, is seeking to restore the company's stock market rating by focusing on capital spend and cost cutting.
He has so far failed to convince activist investor Elliott Management, which has built a 5 per cent stake in BP, that the company can drill its way out of difficulty and that his cost cuts are sufficient.
However, BP has long history of successful exploration and production, and has recently secured valuable drilling rights in India and Azerbaijan, where it has become the leading oil company.
Since taking over as chief executive last year, Auchincloss has consulted 70 per cent of the company's shareholding base.
It is thought that long-standing British owners, such as insurer Legal & General, which controls 38 per cent of the stock, would be deeply unhappy if BP were to be taken over. It is also thought that the UK Government is supportive of BP as a national champion which is developing the country's biggest electric vehicle network of charging stations with Marks & Spencer.
A bid by Shell for BP, favoured by some investment bankers, is seen as much harder to accomplish than generally thought.
Both companies, as international explorers, have large trading operations and a deal would almost certainly cause competition problems.
Some 35 per cent of the two London-listed firms' operations are understood to overlap.
US rivals Chevron and Exxon Mobil, mentioned as possible bidders for BP, have in recent times virtually withdrawn from exploration beyond the Americas, unlike the two big London-listed players. They have instead focused on the riches of the Permian Basin in Texas and Guyana in South America.
Chevron is seeking to complete its $53 billion merger with US group Hess.
Oil mergers are seen as notoriously tricky to navigate. A quarter of a century after BP, then led by John Browne, took over Amoco, the group is still wrestling with integration of complex accounting systems.
BP believes that if it can lift its annual cashflow from $8 billion in 2024 to $14 billion by 2027, it can raise the value of the group, securing its status.