Seeking Alpha

BP to set up separate unit for assets in U.S. lower 48

  • BP says it will create a new company to manage its onshore oil and natural gas assets in the continental U.S.; it will own the company, to be based in Houston in a different facility from the company offices already there.
  • BP hopes the move will help unlock the significant value associated with its extensive resource position in the lower 48 states and make it competitive with the type of smaller, more nimble companies that have pioneered the U.S. shale boom.
  • BP says it expects to start reporting financials for the business in 2015.
Comments (10)
  • deercreekvols
    , contributor
    Comments (5691) | Send Message
     
    This belongs on Top News along with the news of (BP) suffering a "major blow."

     

    Long (BP) and always looking for positive news...
    4 Mar, 09:19 AM Reply Like
  • FCARONE
    , contributor
    Comments (364) | Send Message
     
    Will this be a subsidiary of BP or will it be a spin-off that shareholders will receive. The spin -off , or an IPO may provide momentum for a BP share price increase. More information is needed as the announcement is somewhat vague.
    4 Mar, 09:28 AM Reply Like
  • spike77
    , contributor
    Comments (81) | Send Message
     
    I've read articles which say that BP is overpriced at present, but to buy 'long' for the dividend. I suspect that despite the kicking that the company is getting at the moment from the USA and their Russian involvement, they have some trick to release value. So I'll stay with the stock for the ride.
    4 Mar, 11:25 AM Reply Like
  • glf4mny
    , contributor
    Comments (299) | Send Message
     
    FCARONE: click on the "will create a new company" above in blue to read the announcement. BP will own the company.
    "BP today announced its intention to establish a separate business to manage its onshore oil and gas assets in the US Lower 48. The new business will operate separately from the rest of BP and will be designed to adapt to the rapidly changing and hyper-competitive energy landscape in the region. This move is expected to help unlock the significant value associated with BP's extensive resource position in the US Lower 48 onshore, which BP currently oversees through its Houston-based North America Gas group. BP will own the new US Lower 48 onshore business, with safety remaining its top priority. But the business will be led by a separate management team and be housed at a new location in Houston, apart from BP's Westlake campus. It will have separate governance, processes and systems designed to address the unique competitive and operating environment in the US Lower 48 onshore. And BP is expected to begin disclosing separate financials for the new business in 2015."

     

    This strategy makes absolutely no sense. It is duplicative and counter productive to their efforts in the early 2000s to streamline the E&P sector within BP America, Inc. (a subsidiary of BP, plc. for U.S. E&P operations) following the Amoco and Arco mergers in order to gain efficiencies under one management team. Now, carving out the onshore oil and nat gas units, creating a new autonomous management group and decentralizing staff away from the Westlake campus, come on BP, this could be a recipe for disaster. Because it represents change does not mean it makes good business sense.
    4 Mar, 12:57 PM Reply Like
  • Me_not_you
    , contributor
    Comments (172) | Send Message
     
    It seems like companies go in cycles, let's centralize, no let's decentralize. If you are around long enough you are bound to repeat the cycles at least a half doze times.

     

    To me this sounds like BP is either going to sell their lower 48 on shore assets or spin it off into a separate company. Either way will be ok for BP investors. Off shore in the US is where the money is. And Alaska is where the money is.

     

    To me, this is just a forerunner to get rid of onshore upstream assets in the lower 48. There is very little money to be made in natural gas in the Eagle Ford; look at the tough time RDS is having right now with all their investments.

     

    Just ask yourself, what is different about onshore in other countries. Regulations are different, but a rig is a rig. What we have to ask is if it is really a US thing, then offshore and Alaska would be included and they are not. To me this just says, let's build it up and get it ready for sale.

     

    BP executives are smart folks. They are going to unlock value by spinning first separating these assets out of the company and then either spinning them off into a separate company or selling them outright. Either way, shareholders will win.
    4 Mar, 10:10 PM Reply Like
  • FCARONE
    , contributor
    Comments (364) | Send Message
     
    Thanks for the info and for your opinion. I agree the strategy appears to be somewhat senseless and possibly counter productive. I think BP is still reeling from the variety of problems its dealing with and feels it must do something to create positive momentum. I like the stock enough to sell Put options at attractive strike prices( Jan $40@$1.10 or the 38/42 spreads with a, non- annualized 20% yield) . If I can buy the stock at such prices, so be it. However I will not buy the stock for the dividend. I'm not too smart, but I did learn that lesson some time ago! Thanks again.
    25 Mar, 06:37 PM Reply Like
  • sick and tired
    , contributor
    Comments (3) | Send Message
     
    Only separating so they can sell it off! Oh but first make it look good by firing people! Yea no sense! Already look bad due to spill and now it's like someone up there wants to get even...but with the gas operations, makes even no sense since it wasn't even connected. Except that people went and tried to help in the spill! And now WE are ring fenced! Unreal for my husband. Since he has been in oil 95% of his career with BP! And wanted out of NAG. Before!
    And to come out with NO info!! Like where is this new office?? Well I can say it probably does not exist. Why have an office if your going to sell if this was all that announcement said then they would have had all those answers! It there isn't any!
    28 Mar, 05:41 AM Reply Like
  • Me_not_you
    , contributor
    Comments (172) | Send Message
     
    If you or husband get any more info on this, please pass along.

     

    I can see how you are frustrated. I really wish you and your husband well.

     

    To me it seems like BP is exiting this line of business in the US and probably financially it only makes sense to ring it off and sell it.

     

    Again, though, I really wish you all well. As a BP investor, it is important to me that the company treat their employees well.
    28 Mar, 05:41 PM Reply Like
  • sick and tired
    , contributor
    Comments (3) | Send Message
     
    Yup, it's going to be a sell! For shareholders. And the employees have NO choice they have locked them down with announcement! And No employee for the L48 can go back to oil! So it's get shoved off and then the company will fall apart and good hard working employees are stuck...all to pay shareholders because our government wants more and more. BP has paid way too much already! And now the government is going to let them screw some more Americans! Gee thanks BP!
    So you tell me people what does an employee do in this case!
    24 Mar, 03:49 AM Reply Like
  • sick and tired
    , contributor
    Comments (3) | Send Message
     
    Ok supposedly I am sick and tired...but it seems someone has taken it upon themselves to rewrite my comments! Once again I have been hacked! Hope this goes out right! My husband and I like BP and want to stay with BP. I do not know all about the stuff above my husband does not give me info like that, as he is very BP proud and oriented! We really hope to stay with BP. They are a great company and have been good to us! The posts above look like a few bits that I put on FB and then rearrange with some bad input. I do have people working on it! I have been hacked before. So frustrating......
    30 Mar, 05:27 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector