If there was one thing guaranteed to follow low oil prices (other than the loss of thousands of jobs) it was mergers and acquisitions. This has certainly rung true as companies consolidate their portfolios or use their war chests to snap up competitors while prices are down. The recent deal between Royal Dutch Shell and BG Group has many expecting a renewed wave of major business decisions. The buzz has fueled rumors that BP Plc will be susceptible to a takeover by fellow oil giant Exxon Mobil Corp.
Now even BP is worried that it may be next in line on the merger marketplace, according to Bloomberg. Sources revealed to Bloomberg that "BP executives are concerned the company is vulnerable to an opportunistic bid." Executives have recognized ExxonMobil, of course, but also Chevron Corp. as potential buyers.
The one thing that is crippling BP's market fortitude, however, is also making it an uneasy target. U.S. District Judge Carl Barbier has yet to rule just how much the British oil company will pay in fines under the Clean Water Act for the Deepwater Horizon oil spill, which began five years ago as of Monday. Although BP has shelled out billions for recovery and settlements already, it could be hit with as much as $13 billion in fines for the millions of gallons of crude oil that gushed from its Macondo well.
Despite recent challenges for BP, though, the company is still worth roughly $131 billion. On the other hand, ExxonMobil, which is the most valuable oil company on the globe, has a value of $368 billion, and according to Bloomberg, it has more than enough capital to spend to scoop up BP.
However, BP's chief executive officer, Bob Dudley, doesn't think there will be a major wave of mergers and acquisitions just yet. "I don't actually see the forces at work for lots of consolidation unless the oil price stays down for quite some time," he said Tuesday at the 2015 IHS CERAWeek Conference in Houston. According to Fuelfix, Dudley thinks it may take much longer to work through present surpluses, putting off oil's recovery. So the question remains: Just how long can BP withstand low commodity prices before it sees a takeover bid?
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BLOOMBERG - Treasury Secretary Steven Mnuchin told a Texas judge that Exxon Mobil Corp. doesn’t have a right to see privileged documents related to a $2 million fine assessed against the energy company for violating sanctions related to Russia’s 2014 invasion of Ukraine.
NPD - Preliminary production figures for June 2018 show an average daily production of 1 747 000 barrels of oil, NGL and condensate, which is an increase of 88 000 barrels per day compared to May.
NOVATEK - In the first half 2018, NOVATEK’s hydrocarbons production totaled 264.3 million barrels of oil equivalent (boe), including 32.93 billion cubic meters (bcm) of natural gas and 5,864 thousand tons of liquids (gas condensate and crude oil), resulting in an increase in total hydrocarbons production by 6.3 million boe, or by 2.4%, as compared to the first half 2017.
REUTERS - Brent crude futures LCOc1 were down 75 cents, or 1 percent, at $78.11 a barrel by 0308 GMT, having fallen as low as $77.60. U.S. crude CLc1 was down 55 cents, or 0.7 percent, at $73.56.