BP takeover speculation heats up as UAE oil giant ADNOC enters the fray for gas assets

UAE lipid elephantine ADNOC has joined the fray of firms said to beryllium circling immoderate of BP's highly prized assets, arsenic takeover speculation for the embattled vigor large kicks into overdrive.

Abu Dhabi National Oil Company is thought to beryllium weighing up a determination for immoderate of the London-listed firm's assets, should the lipid large interruption up oregon question to divest much units, Bloomberg reported Wednesday, citing unnamed sources acquainted with the matter.

ADNOC is reportedly astir funny successful BP's liquefied earthy state (LNG) assets, though it is besides said to person considered a afloat takeover of the company. It is understood by Bloomberg that immoderate prospective woody would apt instrumentality spot via ADNOC's planetary unit, XRG.

Spokespeople astatine BP, ADNOC and XRG declined to remark connected the speculation erstwhile contacted by CNBC.

A protracted play of underperformance comparative to its manufacture peers has thrust BP into the spotlight arsenic a premier takeover candidate. British rival Shell, arsenic good arsenic U.S. lipid giants Exxon Mobil and Chevron, are among immoderate of the names that person been touted arsenic imaginable suitors.

Any imaginable woody betwixt ADNOC and BP is seen arsenic acold from a foregone conclusion, but analysts constituent retired that the 2 companies stock a long-standing narration crossed hydrocarbons and renewables implicit a scope of geographies, astir notably in Abu Dhabi and astir precocious in Egypt.

Former BP CEO Bernard Looney, who left the company aft little than 4 years successful the occupation successful September 2023, sits connected the XRG committee alongside ADNOC CEO Sultan al-Jaber.

Maurizio Carulli, planetary vigor and materials expert astatine Quilter Cheviot, said ADNOC's purported involvement successful immoderate of BP's assets is simply a "significant" improvement — albeit 1 that is somewhat expected, fixed ADNOC is simply a growing, cash-rich concern looking to grow further into gas.

"That said, it seems improbable that Adnoc would see a afloat bid for BP arsenic a full fixed the institution would not beryllium strategically funny successful BP's lipid assets. A fewer different listed lipid majors might, though," Carulli told CNBC by email.

"BP's discrete assets, some upstream and downstream, volition nary uncertainty seizure ample involvement from a fig of some vigor and backstage equity players," helium added.

Last month, BP reportedly attracted involvement from a fig of imaginable buyers for its Castrol lubricants business, a portion thought to beryllium 1 of the "crown jewels" of its portfolio.

Energy companies including India's Reliance Industries and Saudi Arabia's lipid behemoth Aramco, arsenic good arsenic backstage equity firms Apollo Global Management and Lone Star Funds, were each antecedently touted arsenic suitors for BP's Castrol unit, Bloomberg reported connected May 28, citing radical acquainted with the matter.

CNBC has contacted the companies said to beryllium considering BP's Castrol unit.

BP is seeking to fend disconnected a prospective takeover by restoring capitalist confidence. The institution launched a fundamental strategical reset earlier successful the twelvemonth and, contempt posting weaker-than-expected first-quarter profit, CEO Murray Auchincloss told CNBC successful precocious April that the steadfast was "off to a large start" successful delivering connected its caller direction.

Shares of BP person stabilized successful caller weeks, pursuing a crisp autumn successful aboriginal April, arsenic trade warfare volatility rocked fiscal markets. The banal terms is down much than 4% successful the twelvemonth to date.

Allen Good, manager of equity probe astatine Morningstar, said it is improbable BP volition beryllium prepared to divided with important pieces of its upstream portfolio, fixed the firm's caller greenish strategy U-turn to treble down connected hydrocarbons.

As portion of BP's strategical reset, the institution announced plans to summation yearly lipid and state spending to concern to $10 cardinal done 2027, portion slashing spending connected renewables. It is besides targeting $20 cardinal successful divestments implicit the coming years.

"Activist unit has been much connected further outgo and superior reductions, not needfully halfway divestitures. Breaking up the institution is improbable to beryllium the solution shareholders are looking for," Allen told CNBC by email.

For XRG, which ADNOC launched past year, reports of involvement successful immoderate of BP's assets travel arsenic the concern institution seeks deals connected state and chemicals assets to assistance it scope an endeavor worth of $80 billion.

"We are committed to delivering semipermanent worth for our stakeholders and reinforcing Abu Dhabi and the UAE's relation arsenic a planetary vigor and chemicals leader," ADNOC's al-Jaber said astatine the time.

Russ Mould, concern manager astatine AJ Bell, said immoderate imaginable transactions betwixt ADNOC and BP were apt to beryllium hard-driven, with each enactment striving to support its ain interests.

"BP is nether unit to present connected its extremity to trim debt, done improved integrated currency travel and plus disposals," Mould told CNBC.

"ADNOC volition beryllium good alert of this, and however the timepiece whitethorn beryllium ticking truthful acold arsenic BP absorption is concerned, and it volition truthful look to thrust a hard bargain successful the process, should it so beryllium funny successful immoderate of BP's assets, arsenic reports suggest," helium added.