BP plc officials said Friday they intend to sell the company's lucrative stake in TNK-BP, which is owned equally with Russia's Alfa Access Renova (AAR), a group of Russian billionaires.
Analysts estimated that the sale, if completed, could garner up to $30 billion for BP, basically erasing all of its estimated financial obligations related to the Macondo well blowout in the Gulf of Mexico. In 2010 TNK-BP represented about 20% of BP's total reserves; about one-quarter of total production and 10% group profits.
BP said it had "received unsolicited indications of interest regarding the potential acquisition of its shareholding in TNK-BP" and that it had an obligation to shareholders to pursue a potential sale and had notified its Russian partners of its intention to do so. BP said there was no guarantee that the transaction would take place but it would make another announcement when and if it was appropriate.
In response, AAR said it "has become apparent that the parity ownership structure has become inoperable given fundamental differences over strategy and governance between AAR and BP. AAR remains committed to the successful development of TNK-BP, including potentially increasing its shareholding in the business."
TNK-BP was formed in 2003 following the merger of BP's Russian oil and gas assets and the assets of AAR. It is Russia's third-largest producer with operations extending into Ukraine, Brazil, Venezuela and Vietnam. The venture employs 65,000 people.
Average daily production in 2011 was 1.988 million boe, up from 2010's 1.934 million boe. Total organic capital expenditure was more than $4 billion in 2011, versus $3.4 billion in 2010.
Motley Fool's David Holding wrote on Friday that BP has had no direct control in TNK-BP and he considers the sale "unequivocally good news...If any deal is struck, it would see the end of what has been both a profitable but troubled partnership, freeing up a dollop of cash to help meet the continuing costs of the 2010 Gulf of Mexico oil spill, as well as the potential fines still to be settled with the U.S. and state governments.
"More importantly, it removes the uncertainty that the market hates. But there's more to the potential sale than meets the eye. The truth is that the marriage between the oil giant and its Russian billionaire-owned partner was one made in hell," he said, noting that on May 28 TNK-BP CEO Mikhail Fridman resigned, citing "a breakdown in relations with BP."
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