BP Plc. is swapping about US$2.2 billion of its own shares for a stake in one of Abu Dhabi’s largest onshore oil concessions, cementing its 77-year relationship with the emirate.
The UK’s second biggest oil group will issue new ordinary shares to pay for 10 percent of the Abu Dhabi Co. for Onshore Petroleum Operations Ltd., giving the emirate a 2 percent holding in BP, Bloomberg reports, citing the London-based company.
Abu Dhabi investor Mubadala Development Co. is likely to hold the BP shares, two people with knowledge of the matter said, asking not to be named before a formal announcement.
The agreement promises BP additional cash flow and revenue after a downturn that has forced the industry to slash billions of dollars of investments worldwide in the past two years.
The payment in shares also helps BP preserve its own cash and maintain a balance sheet that has seen debt and leverage rise during the oil-price collapse.
“The economics are good for us and for our shareholders, and for BP it brings a strategic partner,” chief executive Bob Dudley said in an interview in Abu Dhabi.
“This agreement will provide BP with long-term access to significant and competitive resources that we already understand very well.”
The deal will provide an output of 160,000 barrels a day, in addition to the 95,000 barrels BP now produces in Abu Dhabi, Dudley said. The 40-year concession includes the Bab, Bu Hasa, Shah and Asab fields with total resources of as much as 30 billion barrels of oil equivalent, BP said.
France’s Total SA owns a 10 percent stake in the Abu Dhabi onshore concessions, Japan’s Inpex Corp. has 5 percent and South Korea’s GS Energy 3 percent, BP said.
The Abu Dhabi National Oil Co. is still looking for partners to take the remaining 12 percent of the 40 percent reserved for overseas oil companies.
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