BP launches hunt for new investors
London, July 4, 2010
Oil major BP is seeking a strategic investor to secure its independence in the face of any takeover attempts as it struggles with a devastating oil leak in the Gulf of Mexico, newspapers said on Sunday.
Britain's Sunday Times said the company's advisers were trying to drum up interest among rival oil groups and sovereign wealth funds to take a stake of between 5 and 10 per cent in the company at a cost of up to 6 billion pounds ($9.1 billion).
Abu Dhabi newspaper The National said BP could get a reprieve from Middle East financial institutions looking to make a strategic investment in the company, citing informed sources.
Proposals from the region have already been submitted to BP advisers in London, the newspaper reported, and could involve Middle Eastern investors purchasing key assets from BP, which has lost more than half its market value since an explosion at the Deepwater Horizon rig on April 20 started the still-gushing leak.
The paper said regional financial institutions might also give financial backing to any capital raising that BP might be considering to reinforce its balance sheet following the environmental disaster, which could cost as much as $60 billion to clean up.
The report did not indicate which Middle Eastern financial firms issued the proposals or what the size of investments could be.
Regional sovereign wealth funds, such as the Qatar Investment Authority (QIA) and Abu Dhabi Investment Authority (ADIA), have supported Western companies in times of financial crisis by purchasing stakes in western banks and effectively halting declines in their share prices.
Rival oil majors ExxonMobil, Total and Royal Dutch Shell have been mooted as possible bidders. BP declined to comment on the speculation.
Meanwhile, the Sunday Telegraph reported that BP was facing fresh criticism over its approach to safety as it emerged it did not use an industry standard process, known as a safety case, to assess risk at the Deepwater Horizon rig.
A BP spokeswoman confirmed to Reuters that it did not use the procedure, developed in Britain after the Piper Alpha oil rig explosion in 1988, at any of its U.S. wells as there was no legal requirement in the US to use it.
BP shares closed down at 322 pence in London on Friday, valuing the business at 60.5 billion pounds.-Reuters