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ExxonMobil could snap up BP in a single bite

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Information sourced from an FT article by Energy Editor Christopher Adams published 15 February 2015 under the headline:

“BP’s battles leave it vulnerable to major move”

Extract

If ExxonMobil chief executive Rex Tillerson really wanted to, he could snap up BP in a single bite. Of all the UK major’s rivals, Exxon, the world’s biggest energy company, has the firepower to swallow BP whole. Could it happen? Some industry insiders think yes.

The article sets out the reasons already highlighted by many other industry experts and observers.

  • The financial fall out from Deepwater Horizon disaster
  • BP’s “languishing” share price
  • The collapse in the price of oil

It points out that as a result of the combined factors, BP’s continuing membership of the “the Big Five” is doubtul and sets out the benefits of a takeover by ExxonMobil, including the potential for Exxon to manipulate U.S. courts to bring down costs arising from Deepwater Horizon and from taking over BP’s stake in the Rosneft/Putin Arctic drilling project. read more

Exxon Mobil Preparing to Buy BP? (More Speculation)

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By: MICHEAL KAUFMAN

Published: Feb 13, 2015 at 8:00 am EST

According to the recent reports from several financial media outlets, Exxon Mobil Corporation (NYSE:XOM) is in the market to hunt.

The multinational oil giant is one of the strongest defensive companies in the energy sector. It performs fairly well in low-price environments. The American company has an exceptionally strong cash position, which allows it to beat competition by acquiring it.

Exxon has a history of acquiring energy companies when commodity prices are low. During 2009, natural gas price plummeted 70%. Exxon Mobil acquired XTO Energy Inc, an oil and gas company, in an all-stock deal, putting the Texas-based company’s valuation at $41 billion. read more

SPECULATION: Announcement of a Shell BP merger later today?

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By John Donovan

On 29 Jan I published the comments from a former Shell employee who advised, based on Shell insider information, that Ben van Beurden and Marvin Odum would be ringing the bell at the New York Stock Exchange to day, celebrating the launch of SHLX (Shell Midstream Partners LP) on the NYSE.

That seemed unlikely since Shell Midstream Partners rang the closing bell at the NYSE on Friday 16 Jan 2015 for that same purpose.

The source speculated that there is something bigger going on – perhaps the announcement of a Royal Dutch Shell BP merger? read more

Oil rout gives Exxon and Shell reason to buy rival ‘sisters’

Screen Shot 2015-01-31 at 08.53.48…a major deal over the next year that will bring together two of the super majors, or see one of their smaller rivals swallowed up, is highly likely – and almost a certainty if historical precedent is anything to go by. Certainly, if the oil rout of the late 90s is anything to go by, a major deal among the industries big “sisters” is just around the corner.

Article By Andrew Critchlow, Commodities editor, The Telegraph, published 30 Jan 2015 under the headline:

Oil rout gives Exxon and Shell reason to buy rival ‘sisters’

First there were the “Seven Sisters”, a term coined in the 1950s to describe a cabal of the world’s biggest international oil companies (IOCs), which at that time controlled the supply of fossil fuels with a vice-like grip.

Then came the Yom Kippur war of 1973 and the subsequent Middle East oil crisis, which would gradually see their power over more than three-quarters of the world’s crude wrestled back by newly independent states in the Persian Gulf.

By the late 1990s – with oil prices at around $20 (£13.20) per barrel – the original seven had grown much bigger and been morphed into new giants, which consumed their smaller rivals in a race to acquire what little of the world’s oil and gas reserves still remained open to them. read more

BP Shell merger on the horizon

Screen Shot 2014-10-28 at 12.29.57Potentially, a prolonged period of low oil prices might finally see BP and Shell, like two drunken sailors, holding each other up through the merger that has so long been on the horizon.

AN ARTICLE BY ALEX BRUMMER FOR THE DAILY MAIL PUBLISHED 30 Jan 2015 

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“ALEX BRUMMER: Big oil players confront the slump by slashing capital expenditure”

Oil exploration and production is a long-term enterprise so it is encouraging that Shell chief executive Ben van Beurden is not hitting the panic button.

The group’s market value of £139billion makes it the biggest beast on the FTSE 100 by a long chalk. In that context, and with its strong cash flows, the asset disposals and the proposed cuts in capital spending of $15billion (£9.9billion) over three years are relatively modest.

In pressing on with capital expenditure, despite the fall in the oil price by 60 per cent over the last year, Shell looks to be counting on energy prices bouncing back. It is an interesting assumption because there is a prevailing view that there has been a mispricing of oil for a lengthy time because of a glut of supplies. read more

Ben Van Beurden Ringing NYSE Bell on Monday?

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Hi John,

I am an ex-Shell employee and appreciate your site very much. I still keep in touch with friends at Shell, and one of them is traveling to New York this weekend ahead of the NYSE bell ringing ceremony on Monday. My friend was told that BVB and Marvin Odum would both be in attendance. Apparently this event has been described as celebrating the launch of SHLX (Shell Midstream Partners LP) on the NYSE, however I am wondering if it could be about something bigger since Ben and Marvin are both going to be there. (Perhaps a merger Monday BP takeover?) Do you have any ideas? read more

Dusting off the Shell BP merger files

Screen Shot 2015-01-22 at 21.22.36Shell and the forerunner of BP bribed a famous politician to facilitate a merger 

According to Sir Martin Gilbert, the official biographer of Winston Churchill, Royal Dutch Shell and BP (then called Burmah Anglo-Persian Oil Company), were in merger discussions in 1923.

Extract from a BBC News Magazine article published 22 Jan 2015

10. Cash for influence

“In return for a fee of £5,000 two oil companies, Royal Dutch Shell and Burmah Anglo-Persian Oil Company [later BP], asked him to represent them in their application to the government for a merger,” Gilbert’s official biography stated.

By modern British political standards, the 1923 payment would be considered highly inappropriate.

Churchill, whose “political career was in the doldrums” at the time, according to a history of British Petroleum, agreed to use his parliamentary influence to raise the issue in return for money. read more

Blood in the water

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Mergers offer a chance to cut costs and save money. Prices are low. BP, now fit, lean and cheap, is not best placed to go shopping itself. So it could be on someone else’s list.Screen Shot 2015-01-20 at 22.32.28

The oil giant’s troubles could make it a takeover target, especially if the price of crude keeps falling

INVESTORS in BP are a patient bunch, and well rewarded for it. Britain’s third-largest company pays generous and reliable dividends, making it a mainstay of many private and institutional portfolios. But in the run-up to the oil giant’s quarterly results on February 3rd, some investors are jittery. Although BP’s dividend yield is a juicy 5.8%, its shares have fallen by a fifth over 10 years, greatly underperforming the broader market (see chart) and making total shareholder returns slightly negative. This is mainly because of the Deepwater Horizon disaster in the Gulf of Mexico in April 2010, which cost 11 lives and a stonking $43 billion (and maybe more) in fines, legal bills, compensation and clean-up. read more

Why A BP Shell Merger Is Not A Sensible Option

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Why A BP plc (BP) Royal Dutch Shell Merger Is Not A Sensible Option

Bidness Etc discusses how lower oil prices have impacted BP’s stock price, and why the merger with Royal Dutch Shell is not on the cards

By: MICHEAL KAUFMAN
Published: Jan 6, 2015 at 9:46 am EST

Crude oil prices have declined sharply this year. West Texas Intermediate (WTI) has already fallen below $50 per barrel for the first time in nearly five-and-half years, with Brent crude hovering around the same level. Several US oil companies are fighting for their survival, especially after the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain its current level of production. WTI and Brent crude were trading at $49.56 and $52.57 per barrel, respectively, during pre-market trading today. read more

Could Royal Dutch Shell buy BP?

Money Talks: Could Royal Dutch Shell Buy BP?

Screen Shot 2014-10-28 at 12.29.57Royal Dutch Shell’s rumoured takeover bid for BP is not as outlandish as first appears, according to Edmund Shing, global equity portfolio manager at BCS Asset Management.

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Since July, the collapse in world oil prices has been the talk of global financial markets. Brent crude oil, the global benchmark, has fallen from $115 per barrel to under $69 today, a price not seen since 2009.

This has been painful for investors holding oil & Gas stocks such as Royal Dutch Shell (RDS) or BP, with Royal Dutch Shell shareholders nursing losses of 10% since June, and BP shareholders an even more painful 15% loss since June.

There have been a number of consequences of this sharp oil price fall, one of which has been an increase in merger & acquisition activity in the global Oil & Gas sector. For instance in Oil Services, Halliburton is in the process of taking over US rival Baker Hughes for $35bn. read more

Shell must put BP out of its misery

Screen Shot 2014-10-28 at 11.51.59Article by Jeremy Warner published on 4 Jan 2015 in The Sunday Telegraph

Valued at nearly £140bn, Shell is today worth almost twice as much as BP. Shell must put BP out of its misery before anyone else pounces. Here’s an idea that has investment bankers drooling in anticipation, but needs to be killed off here and now before it becomes self fulfilling… I can’t speak for Shell, but I can report that there is absolutely no appetite for it within BP, which is as bemused as me by the rumours.

Here’s an idea that has investment bankers drooling in anticipation, but needs to be killed off here and now before it becomes self fulfilling – that the time may finally be ripe for Britain’s two oil majors, Royal Dutch Shell and BP, to bury the hatchet and merge, or rather, for the much stronger Shell to takeover the weakened BP.

I can’t speak for Shell, but I can report that there is absolutely no appetite for it within BP, which is as bemused as me by the rumours.

The concept is, of course, scarcely new. We know that exploratory talks have been held on several occasions in the past. Lord Browne, the former BP chief executive, no less, has admitted to them. read more

Big Oil will get even bigger

Screen Shot 2014-02-18 at 18.34.00FROM AN ARTICLE BY FIONA MAHARG-BRAVO PUBLISHED IN THE NEW YORK TIMES FRIDAY 2 JAN 2015

It’s not clear that Shell, the wallflower in the 1990s, will make a move. Exxon and other majors in the United States might be tempted. Either way, chances are Big Oil will get even bigger… 

There was $383 billion in mergers and acquisitions in the oil and gas sector last year, as of Dec. 11. Yet Europe has largely missed out: About three-quarters of the targets have been in North America, according to Thomson Reuters data. Shale has played a big role. In 2015, oil and gas bankers in Europe will get a bigger slice of the action.

The last big fall in oil prices, at the end of 2008, was too short to push a big merger and acquisition wave.

BP’s former chairman, John Browne, wrote in his memoir that a merger with Shell, pondered while he was at the helm, might have delivered $9 billion in annual synergies. read more

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