BP plc’s BP potential takeover appears highly unlikely at present, according to senior bankers at Moelis & Co., who cite the British oil major’s vast size and operational complexity as major barriers to acquisition, per a Bloomberg report.
Speaking to Bloomberg, Stephen Trauber, Moelis Chairman and Global Head of Energy and Clean Technology, indicated that there is no obvious buyer for BP at present, especially not from the United States. He added that even on a global scale, few potential acquirers see BP’s assets as essential.
Shell-BP Tie-Up Logical but Improbable?
Shell Plc SHEL is seen as the most compatible acquirer in terms of asset synergies and regulatory feasibility, according to Trauber. However, Shell’s earlier shift toward traditional oil and gas, and its current stronger market positioning make a deal less attractive from its side.
That said, Trauber acknowledged that there is a good chance of a tie-up in the future, particularly if BP’s valuation remains subdued and Shell continues to strengthen its balance sheet. In such a scenario, strategic alternatives may need to be reassessed.
BP Divestment Program Faces Headwinds
BP’s $20 billion divestment plan is encountering headwinds, with its lubricants unit, Castrol, standing out as a particularly difficult asset to offload. According to Moelis, the business has a narrow pool of potential buyers, making a successful sale uncertain, even under competitive conditions.
The company may also consider selling its high-quality oil assets in the United States that may attract strong interest. However, such a move could trigger broader concerns about BP’s future strategy, as highlighted by Moelis Managing Director Muhammad Laghari.
No Imminent Buyer for BP
For now, the consensus among energy dealmakers is that a BP takeover remains a distant prospect. While strategic realignments and market dynamics could change the picture in the future, BP’s scale, asset mix and valuation challenges make any near-term acquisition highly improbable.
BP’s Zacks Rank & Key Picks
BP currently carries a Zack Rank #5 (Strong Sell).
Investors interested in the energy sector may look at a couple of better-ranked stocks like Subsea 7 S.A. SUBCY and Energy Transfer LP ET. Subsea 7 presently sports a Zacks Rank #1 (Strong Buy), while Energy Transfer and RPC carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Subsea 7 helps build underwater oil and gas fields. It is a top player in the Oil and Gas Equipment and Services market, which is expected to grow as oil and gas production moves further offshore.
The Zacks Consensus Estimate for SUBCY’s 2025 EPS is pegged at $1.31. The company has a Value Score of A.
Energy Transfer is poised to benefit from long-term fee-based commitments. It is also focused on expanding operations through organic and inorganic initiatives. The firm is looking for solutions to meet growing energy demands from additional demand centers through its pipeline network. Energy Transfer’s systematic investments should boost its total fractionation capacity at Mont Belvieu and raise its top line.
The Zacks Consensus Estimate for ET’s 2025 EPS is pegged at $1.44. The company has a Value Score of A.
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BP p.l.c. (BP): Free Stock Analysis Report Energy Transfer LP (ET): Free Stock Analysis Report Subsea 7 SA (SUBCY): Free Stock Analysis Report Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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