Wed. Dec 1st, 2021

BP and Aker plan to sell a 5 per cent stake in their Norwegian oil and gas joint venture as companies in the sector look for ways to realize value following the turmoil of the pandemic.

Wednesday’s announcement comes as the industry recovers from the asset company valuations received from the coronavirus crisis and investors’ concerns about the impact of the energy transition.

Aker BP’s share price collapsed early last year from $ 34 in early January to around $ 8 in March 2020. Reviving crude oil prices in 2021, driven by the pullback of the pandemic and return to economic activity, helped its share rise to $ 40 per share to recover. , just below the $ 42 record high in 2018.

At current prices, the 5 percent stake is worth about $ 700 million.

Bernard Looney, BP’s CEO, said the deal would “enable BP to realize some of the significant value that Aker BP has already generated”. The proceeds will be used to strengthen BP’s balance sheet and support its share buyback program, he added.

As part of its plan to become a net zero-issue business by 2050, BP aims to sell $ 25 billion in assets by 2025 to reduce debt and pay for green investments.

BP reported strong quarterly gains this month, driven by higher oil and gas prices, but is still struggling to win back investors after its share price fell to a 25-year low last year. Looney has committed to share buybacks of at least $ 1 billion every quarter as long as oil prices remain above $ 60 a barrel, and has promised to increase the dividend by 4 percent per year until 2025.

Aker BP was established in 2016 when the British group’s Norwegian subsidiary merged with Norway’s Det norske oljeselskap. BP controls 30 percent of Aker BP, while Aker controls 40 percent. The sale will be split in proportion to their current respective shareholding, BP said.

JPMorgan and Pareto Securities have been appointed to carry out an “accelerated” sale process, BP added.

Aker, which has interests in more than a dozen Norwegian companies, said the sale would help balance its portfolio and free up cash.

BP is not the only European energy chief exploring ways to realize value from existing assets. The Italian oil major, Eni, told the Financial Times last month that he was investigating “various projects”To generate more value through the energy transition, including options related to its 70 per cent stake in Norwegian oil company Var Energi.

Eni also plans to list a minority stake in its retail and renewable energy division next year to help fund its oil and gas shift.

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