No-one's shelling out for BP
BP shareholders have endured a miserable decade, but a bid seems unlikely.
So, that was wishful thinking, that was. It’s only a few weeks since Shell’s chief executive Wael Sawan denied any ambition to buy BP, yet here was the rumour machine in full flow, thanks to the Wall Street Journal. Mr Sawan had explained that he would rather stick to the knitting, to weave a prettier Shell, than embark on a process of turning round BP. Any excess capital would go towards buying in Shell shares, which he considered inexpensive.
Shell itself has had a pretty bumpy ride, ever since the (former) board panicked at the sight of the oil price briefly turning negative and summarily scrapped over half a century of rising dividends. The damage from that little disaster has still not been fully repaired, and several payout policies later, a surplus which would previously have been used to raise the dividend is now divided between buyouts and payouts.
Sawan is bringing stability and renewed focus on the fact that Shell is an oil and gas company. It learned the hard way that extracting energy from wind and sun is an altogether different business to that of winning hydrocarbons. If Shell learned the hard way, then BP is still at school. Its last CEO departed for reasons unconnected to any “beyond petroleum” vibe, although given what has happened since, he would surely have had to go as the cost of the greening policies he advocated became clear.
BP shareholders have endured a miserable decade, but a bid seems unlikely. Both Exxon Mobil and Chevron have recently splashed their cash on big takeovers, stretching managements and balance sheets. In addition, the pair are currently scrapping in the London courts over ownership of a vast new oilfield offshore Guyana.
No-one else is big enough to contemplate spending the $100bn-plus that BP would cost, apart from national oil companies. The political storm that would follow a bid for BP from Saudi Arabia’s Aramco scarcely bears thinking about.
So Murray Auchinclos, BP’s stand-in CEO, is likely to have to find a way forward. The failed sale of Castrol hardly helps him, but the presence of an activist shareholder, and the realisation that nobody at BP has a better idea, should encourage him to be ruthless. Meanwhile, theTakeover Code rules, designed to minimise uncertainty, have inadvertently created some. Shell’s denial of any interest bars it from an approach for six months. Expect the rumour mills to start up again around Christmas.
 | A guest post by
|