In a brief press release this morning, BP plc (NYSE: BP) has said that the company has “received unsolicited indications of interest regarding the potential acquisition of its shareholding in TNK-BP.” TNK-BP is a 50-50 joint venture between BP and Russian company Alfa Access Renova that was formed in 2003.
BP said it has notified Alfa Access Renova of BP’s “intention to pursue a potential sale.” The dry language very likely hides BP’s joy at a possible sale. The Financial Times said the sale could fetch up to $30 billion and that one of Russia’s state-backed energy companies is the potential buyer. That would be either Rosneft, the state oil company, or Gazprom, the state natural gas giant.
TNK-BP’s history has been checkered. Although it has produced solid returns for BP, in 2007 the company lost its stake in the huge Kovykta gas field over a production dispute. The Russian government said TNK-BP was not producing as much gas as the license called for; TNK-BP answered that it had no market for the gas. The head of the company, now the CEO of BP, was basically run out of the country.
Gazprom eventually got TNK-BP’s 63% stake in Kovykta for about $773 million at a bankruptcy auction. The field is estimated to hold 2 trillion cubic meters (more than 70 trillion cubic feet) of natural gas. At $1/cubic foot, BP’s share would have been 31.5%, or $22 trillion over the life of the field. Gazprom got a pretty sweet deal.
BP has received about $19 billion in dividends from TNK-BP since 2003, and the joint venture accounts for 29% of BP’s production and 27% of its proved reserves. TNK-BP has been a headache for BP, but not a big enough headache for the company to be willing to give it away.
Unless, of course, it is forced to, as it was essentially forced to give up its stake in Kovykta. And the idea that Gazprom or Rosneft will pay anywhere close to $30 billion for BP’s stake in TNK-BP is probably sheer fantasy.
BP’s shares are up 2.7% in the pre-market this morning, at $37.45 in a 52-week range of $33.62-$48.34.
Paul Ausick
Want to Retire Early? Start Here (Sponsor)
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Have questions about retirement or personal finance? Email us at [email protected]!
By emailing your questions to 24/7 Wall St., you agree to have them published anonymously on a673b.bigscoots-temp.com.
By submitting your story, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
