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Exxon, Shell May Consider Possible Bid for BP, JPMorgan Says

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By Fred Pals

June 29 (Bloomberg) — Exxon Mobil Corp. and Royal Dutch Shell Plc may consider bidding for BP Plc after the London-based oil company lost more than half of its market value in the wake of the Gulf of Mexico oil spill, JPMorgan Cazenove Ltd. said.

Exxon Mobil has the stronger balance sheet and proven ability to integrate a large transaction, according to Fred Lucas, a London-based analyst at JP Morgan. It could make a cash and share offer, valuing BP at 473 pence a share compared with yesterday’s close of 308.25 pence, and including a $50 billion spin-off of BP’s downstream assets, according to JPMorgan.

BP’s market value has collapsed by more than $100 billion since the April 20 explosion aboard the Deepwater Horizon drilling rig that killed 11 crew members and caused the leak. The company has set aside $20 billion to pay for Gulf restoration and compensation claims and said yesterday the cost of battling the spill had reached $2.65 billion.

Any potential attempt to buy BP would have to be backed by “ruthless integration,” JPMorgan said. BP has many high quality assets, including deepwater positions and upstream operations, Lucas wrote under a future possible scenario.

Sheila Williams, a spokeswoman for BP, declined to comment, as did Kim Blomley, a London-based spokesman for Shell.

–Editors: Stephen Cunningham, Reed Landberg.

To contact the reporter on this story: Fred Pals in Amsterdam at [email protected]

To contact the editor responsible for this story: Will Kennedy at [email protected]

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