BP 'post crisis'

Friday, Jan 14 2011 by

As marben has declared the BP crisis play thread closed, here is a new one...

To kick off, there will be a press conference at pm today on a BP / Rosneft share swap deal:

BP PLC (BP, BP.LN) is poised to unveil a share swap agreement with OAO Rosneft, the state-controlled Russian oil firm, according to people familiar with the matter, in a deal that will deepen the U.K. company's ties in Russia.


BP already owns a roughly 1% stake in Rosneft, and last year it struck a complex deal to effectively borrow against the stake when it was rushing to raise funds to help pay for the cost of the Gulf of Mexico oil spill.

For BP, which already has a significant joint venture in Russian known as TNK-BP, such a deal might give it greater access to Russia's vast resources of oil and gas.

For Rosneft, an agreement could be an opportunity to pick up BP's shares while they are still depressed in the aftermath of last year's Deepwater Horizon disaster in the Gulf of Mexico. Many analysts believe the company's shares remain undervalued as BP battles the massive cleanup and legal costs of the spill.



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BP p.l.c. is an integrated oil and gas company. The Company owns an interest in OJSC Oil Company Rosneft (Rosneft), an oil and gas company. The Company's segments include Upstream, Downstream, Rosneft, and Other businesses and corporate. The Upstream segment is engaged in oil and natural gas exploration, field development and production, as well as midstream transportation, storage and processing. The Downstream segment has global manufacturing and marketing operations. The Rosneft segment has a resource base of hydrocarbons onshore and offshore. The Other businesses and corporate segment comprises the biofuels and wind businesses, shipping and treasury functions, and corporate activities around the world. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging. more »

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43 Posts on this Thread show/hide all

StrollingMolby 4th Apr '11 24 of 43

In other news announced over the weekend, Transocean executives have awarded themselves bonuses for their "exemplary statistical safety record".  Surely an April Fool, no?

Transocean, the world’s largest offshore rig company, awarded its executives bonuses for 2010, citing “the best year in safety performance in our company’s history,” in spite of the Macondo disaster in the Gulf of Mexico, according to a regulatory filing.

“Notwithstanding the tragic loss of life in the Gulf of Mexico, we achieved an exemplary statistical safety record as measured by our total recordable incident rate and total potential severity rate,” Transocean said in a filing.

“As measured by these standards, we recorded the best year in safety performance in our company’s history, which is a reflection on our commitment to achieving an incident free environment, all the time, everywhere.”



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Fangorn 4th Apr '11 25 of 43

Absolutely incredible the Transocean's safety related bonuses yes.

Still, it's an American company so not a whisper from Obama. Quel surprise.

At least things are looking up for BP however. The worst is well behind it (just hope they aren't accident prone and we get another mishap.They certainly need to work on that.)

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emptyend 21st Apr '11 26 of 43

BP now sueing Transocean for $40bn, according to Reuters. Also suing Cameron.

BP accused Transocean of negligence, saying it caused the drilling rig to be "unseaworthy."

"The simple fact is that on April 20, 2010, every single safety system and device and well control procedure on the Deepwater Horizon failed, resulting in the casualty," BP said.

This should be a very interesting case, amidst the welter of lawsuits.....

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SW10Chap 21st Apr '11 27 of 43

This is going to be interesting - if not entirely surprising. As I first suspected and posted here (exactly a year ago, as it happens)

I can't see BP being implicated in any of this. I think that Transocean and any service companies who operate Zone II units or whose emploeyes have access to electrical equipment that isn't intrinsically-safe will be the ones who will wait in some trepidation for the investigations to be completed

Whatever else happened, BP's lawyers will be making the point that a gas leak doesn't necessarily lead to an explosion:

...the destruction of the rig is not assured until you have a spark. And then an explosion.

You can have any amount of gas-cut sludge pissing out of the well without exploding as long as the rig does what it is supposed to do, which is to render itself inert by shutting off all circuits which aren't intrinsically safe. And that should happen at first sniff of gas at surface resulting in yellow flashing lights, loud sirens, semi-darkness and the depressing sight of all your systems suffering a plug-pull.

And if your rig is still there, then so is your riser and so is your BOP. All of which gives you a platform from which you can deal with the problem. It could have been over in under a week. They need to find out what ignited the damned thing and I'd say it's odds-on that Transocean kit - or possibly that of another service provider - caused it.

If they can get that sewn up, they can then go back and look at contributory causes to the leak itself. For which they seem reckon they can get Cameron on the hook too.

But let's not forget the importance of that spark:

The fact remains that if there hadn't been a spark, there would at least have been a stable platform (in this case the Deepwater Horizon itself) from which to combat the release. It was the capsizing rig which damaged the riser, not escaping hydrocarbons - or even the fire.

And, as I said back in September,

Transocean's lawyers are going to have a lot to do

- and you can be sure that BP have kept all their receipts.

It's perhaps in the nature of lawsuits that it's unlikely that BP will get their full claim (dare I say that it may even be politically unacceptable?). Nevertheless, the share purchases I made shortly after the event and during the clean-up are my bet that they will get a substantial proportion.




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dodge1664 24th Aug '11 28 of 43

an update on the 20bn disaster fund:


Let's hope BP gets some of the money back...

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Fangorn 24th Aug '11 29 of 43

Call me a cynic, but, whilst it clearly states

One of the provisions of the deal was that, “Any money left in the fund once all legitimate claims have been resolved and paid will revert to BP.”

I'd be very surprised if BP saw any of it. (Perhaps a goodwill donation will be "coerced" out of BP by the Obama administration as they head into an election year for example)

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kenobi 24th Aug '11 30 of 43

sure, and there might be pressure to invest in the area etc,

but we're talking about 10 billion dollars potentially, difficult to see that all being spent unless some new information comes to light demanding higher spending,


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Fangorn 24th Aug '11 31 of 43

Yep, that was more what I was thinking..pressure to invest in the areas hit. Time will tell.

When it comes to the US $10bn spend is a drop in the ocean.I'm sure the politicians will find ample suitable "projects"

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stock sleuth 3rd Sep '11 32 of 43


Any views with the share in the 370s.

Will BP be able to resolve the AAR problem and take better control of TNK/BP?

Are the financial damages for Macondo quantifiable?

Will they get new permits to drill in the GoM, if so how long will they have to wait for approval?

Once the DOJ case is settled what would be a sensible annual dividend yield?

What is fair value for the share price?

Thank you

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tournesol 4th Sep '11 33 of 43

As a holder I'm very relaxed.

AIUI, since the Macondo leak, BP has disposed of more than $20 billion of assets. They all sold for way over book value. A sum-of-the-parts valuation of the co is now well above the current enterprise value. So worst case scenario is that the co gets
a) taken over or
b) broken up and sold off

in either case the current share price looks like bargain basement to me

of course with many other stocks suffering from price weakness BP is far from alone in looking cheap right now

but I'm more inclined to buy rather than sell

Have to add that I'd expect ExxonMobil or even the Chinese to be giving serious thought to a bid. Might be kinder to put BP out of its misery. Can't remember such a catalogue of management errors and misjudgements in an oil major as BP has delivered in the past year or two.


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Fangorn 4th Sep '11 34 of 43

like yourself Tourn, i'm pretty relaxed as well. Having bought my largest chunk @ 330, as well as averaging down during Macondo, happy to sit tight, take the divi, and see where we go.

Should there be a takeover attempt, or value realised through a demerger of some sort, I think I'd look to reinvest the proceeds in Shell.

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nigelpm 4th Sep '11 35 of 43

It's certainly getting back to "buy again" territory. Definitely one to watch closely. A poor couple of days in the markets and it'll be back down to bargain territory.

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emptyend 4th Sep '11 36 of 43

A poor couple of days in the markets and it'll be back down to bargain territory

The issue with BP is two-fold:

1) Do they have a credible strategy (given the "false start" with Rosneft)?

2) Do they have significant legal liabilities over the GoM incident?

I'm a lot more comfortable with the second point than the first - and I wonder how BP would sum up their own strategy at this point. A few years ago it was "Beyond Petroleum".....and that got quietly backburnered. Then we had the move into Russia. But what will the next move be? There may be a perception that they are rather thrashing around looking for a good way forward?


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djpreston 5th Sep '11 37 of 43

EE, I'd say that they'll try to forge deeper Indian links to build on the RIL deal.

They "need" a vast new acreage play - so why not NKO and the huge Indonesian acreage? Not that expensive either.

Fund Management: European Wealth
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emptyend 5th Sep '11 38 of 43

In reply to djpreston, post #37

Attaboy!  :-)

Not quite sure they will go that route - but they do need to do something substantial and distinctive, I think.

I'd think they are more likely to take out BG (but then I've got a few BG shares and no NKO  ;-))



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djpreston 5th Sep '11 39 of 43

Surely BG buying BP would make more sense given the poor management at BP compared to the exemplary BG record? ;-)

Fund Management: European Wealth
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emptyend 5th Sep '11 40 of 43

In reply to djpreston, post #39

Surely BG buying BP would make more sense given the poor management at BP compared to the exemplary BG record? ;-)


Nah - not after today's LTIP numbers

They'd have more sense too.....

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JPGH 5th Sep '11 41 of 43

I'd like to see them take out GKP (for > £6/share) but would settle with BP buying BG for >£20 too.


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Fangorn 5th Sep '11 42 of 43

I'd rather they take out SOCO for > £6/share, but would settle for GKP as well :)
NO BG here unfortunately.

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Fangorn 7th Feb '12 43 of 43

BP in rude health it seems

Final results

Raises dividend!

Key date: Feb 27th New Orleans court opens doors to civil trial and the apportionment of blame for spill at macondo.

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