ADNOC Considered Buying Oil Giant BP
ADNOC has recently held preliminary talks with BP and has contacted investment banks for advice on a potential takeover, according to two of Reutersโ sources.
The reported approach by ADNOC comes as the U.S. oil and gas industry is undergoing a major consolidation, with many multi-billion deals announced in America in recent months.
The mergers and acquisitions (M&A) wave hasnโt reached Europe yet, although analysts have said that BP could be a target of a potential takeover by a rival.
BPโs stock suffered early this decade when the company announced its net-zero strategy. In early 2023, investors cheered BPโs reversal of some goals and its commitment to invest more in resilient oil and gas projects than previously planned and pump more hydrocarbons for longer to meet the worldโs needs.
BP said in February 2023 it would be producing more oil and gas for longer and increase investment into oil and gas projects by an average of up to $1 billion a year until 2030.
For the European majors, the focus โis to narrow and even close the structural valuation gap to their premium-rated US peers,โ Wood Mackenzieโs analysts said in the wake of the Exxon and Chevron announcements of mega all-stock mergers.
In ADNOCโs pursuit of a takeover target, BP was one of the companies the UAE firm has looked at, one of Reutersโ sources said.
There were some direct talks between ADNOC and BP but โIt didn't go far,โ the source told Reuters.
BP and ADNOC have been partnering on projects for more than five decades. The most recent collaboration was the creation of a natural gas joint venture in Egypt.
By Tsvetana Paraskova for Oilprice.com
Provided Content: Content provided by Baystreet. The Globe and Mail was not involved, and material was not reviewed prior to publication.