BP shares spark on takeover speculation

(Sharecast News) - Shares in BP sparked on Friday, after it was reported that a range of possible suitors were running a slide rule over the oil and gas major. According to the Financial Times, Shell, Chevron, ExxonMobil, TotalEnergies and Abu Dhabi's Adnoc have run the numbers on a potential acquisition. Oil trader Vitol, meanwhile, is also thought to be potentially interested in parts of the business.

BP's share price has fallen sharply over the last year, by 27%. The blue chip announced plans under previous chief executive Bernard Looney to transition away from oil and gas towards renewables, but failed to win over investors.

Under current head Murray Auchincloss, BP has now abandoned the strategy but investors remain unconvinced.

The share price weakness means BP's market capitalisation now stands at around £57bn, well short of the estimated £120bn value of its assets, excluding debt and liabilities.

Activist investor Elliott Management has built a significant stake in BP. An unnamed person close to the firm told the FT: "The continued underperformance of BP makes it open to a takeover."

Any takeover of BP would be complex and including a number of competition and political hurdles. BP also has significant debt of around $77bn and long-term liabilities.

However, it has a wealth of highly-prized assets, including substantial interests in US shale and in the Gulf of Mexico, making it a key target despite the complexity of any deal.

As at 1000 BST, shares in BP were trading 3% higher at 365.63p.

Neil Wilson, UK investor strategist at Saxo Markets, said: "A trend to consolidate more seems inevitable, and BP has opened itself up to be prey by making strategic errors and execution mistakes.

"It's also the case that the US-UK valuation gap means a reverse into a big US major could make sense - BP does a lot of its business there. I'm not sure the government would like a US takeover - easing into Shell would be simpler from a that point of view, but it would be hard for Keir Starmer to tell Donald Trump that he's blocking [a US firm] from doing business."