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ExxonMobil could snap up BP in a single bite

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Information sourced from an FT article by Energy Editor Christopher Adams published 15 February 2015 under the headline:

“BP’s battles leave it vulnerable to major move”

Extract

If ExxonMobil chief executive Rex Tillerson really wanted to, he could snap up BP in a single bite. Of all the UK major’s rivals, Exxon, the world’s biggest energy company, has the firepower to swallow BP whole. Could it happen? Some industry insiders think yes.

The article sets out the reasons already highlighted by many other industry experts and observers.

  • The financial fall out from Deepwater Horizon disaster
  • BP’s “languishing” share price
  • The collapse in the price of oil

It points out that as a result of the combined factors, BP’s continuing membership of the “the Big Five” is doubtul and sets out the benefits of a takeover by ExxonMobil, including the potential for Exxon to manipulate U.S. courts to bring down costs arising from Deepwater Horizon and from taking over BP’s stake in the Rosneft/Putin Arctic drilling project. read more

Exxon Mobil Preparing to Buy BP? (More Speculation)

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By: MICHEAL KAUFMAN

Published: Feb 13, 2015 at 8:00 am EST

According to the recent reports from several financial media outlets, Exxon Mobil Corporation (NYSE:XOM) is in the market to hunt.

The multinational oil giant is one of the strongest defensive companies in the energy sector. It performs fairly well in low-price environments. The American company has an exceptionally strong cash position, which allows it to beat competition by acquiring it.

Exxon has a history of acquiring energy companies when commodity prices are low. During 2009, natural gas price plummeted 70%. Exxon Mobil acquired XTO Energy Inc, an oil and gas company, in an all-stock deal, putting the Texas-based company’s valuation at $41 billion. read more

SPECULATION: Announcement of a Shell BP merger later today?

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By John Donovan

On 29 Jan I published the comments from a former Shell employee who advised, based on Shell insider information, that Ben van Beurden and Marvin Odum would be ringing the bell at the New York Stock Exchange to day, celebrating the launch of SHLX (Shell Midstream Partners LP) on the NYSE.

That seemed unlikely since Shell Midstream Partners rang the closing bell at the NYSE on Friday 16 Jan 2015 for that same purpose.

The source speculated that there is something bigger going on – perhaps the announcement of a Royal Dutch Shell BP merger? read more

Oil rout gives Exxon and Shell reason to buy rival ‘sisters’

Screen Shot 2015-01-31 at 08.53.48…a major deal over the next year that will bring together two of the super majors, or see one of their smaller rivals swallowed up, is highly likely – and almost a certainty if historical precedent is anything to go by. Certainly, if the oil rout of the late 90s is anything to go by, a major deal among the industries big “sisters” is just around the corner.

Article By Andrew Critchlow, Commodities editor, The Telegraph, published 30 Jan 2015 under the headline:

Oil rout gives Exxon and Shell reason to buy rival ‘sisters’

First there were the “Seven Sisters”, a term coined in the 1950s to describe a cabal of the world’s biggest international oil companies (IOCs), which at that time controlled the supply of fossil fuels with a vice-like grip.

Then came the Yom Kippur war of 1973 and the subsequent Middle East oil crisis, which would gradually see their power over more than three-quarters of the world’s crude wrestled back by newly independent states in the Persian Gulf.

By the late 1990s – with oil prices at around $20 (£13.20) per barrel – the original seven had grown much bigger and been morphed into new giants, which consumed their smaller rivals in a race to acquire what little of the world’s oil and gas reserves still remained open to them. read more

BP Shell merger on the horizon

Screen Shot 2014-10-28 at 12.29.57Potentially, a prolonged period of low oil prices might finally see BP and Shell, like two drunken sailors, holding each other up through the merger that has so long been on the horizon.

AN ARTICLE BY ALEX BRUMMER FOR THE DAILY MAIL PUBLISHED 30 Jan 2015 

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“ALEX BRUMMER: Big oil players confront the slump by slashing capital expenditure”

Oil exploration and production is a long-term enterprise so it is encouraging that Shell chief executive Ben van Beurden is not hitting the panic button.

The group’s market value of £139billion makes it the biggest beast on the FTSE 100 by a long chalk. In that context, and with its strong cash flows, the asset disposals and the proposed cuts in capital spending of $15billion (£9.9billion) over three years are relatively modest.

In pressing on with capital expenditure, despite the fall in the oil price by 60 per cent over the last year, Shell looks to be counting on energy prices bouncing back. It is an interesting assumption because there is a prevailing view that there has been a mispricing of oil for a lengthy time because of a glut of supplies. read more

Ben Van Beurden Ringing NYSE Bell on Monday?

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Hi John,

I am an ex-Shell employee and appreciate your site very much. I still keep in touch with friends at Shell, and one of them is traveling to New York this weekend ahead of the NYSE bell ringing ceremony on Monday. My friend was told that BVB and Marvin Odum would both be in attendance. Apparently this event has been described as celebrating the launch of SHLX (Shell Midstream Partners LP) on the NYSE, however I am wondering if it could be about something bigger since Ben and Marvin are both going to be there. (Perhaps a merger Monday BP takeover?) Do you have any ideas? read more

Dusting off the Shell BP merger files

Screen Shot 2015-01-22 at 21.22.36Shell and the forerunner of BP bribed a famous politician to facilitate a merger 

According to Sir Martin Gilbert, the official biographer of Winston Churchill, Royal Dutch Shell and BP (then called Burmah Anglo-Persian Oil Company), were in merger discussions in 1923.

Extract from a BBC News Magazine article published 22 Jan 2015

10. Cash for influence

“In return for a fee of £5,000 two oil companies, Royal Dutch Shell and Burmah Anglo-Persian Oil Company [later BP], asked him to represent them in their application to the government for a merger,” Gilbert’s official biography stated.

By modern British political standards, the 1923 payment would be considered highly inappropriate.

Churchill, whose “political career was in the doldrums” at the time, according to a history of British Petroleum, agreed to use his parliamentary influence to raise the issue in return for money. read more

Blood in the water

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Mergers offer a chance to cut costs and save money. Prices are low. BP, now fit, lean and cheap, is not best placed to go shopping itself. So it could be on someone else’s list.Screen Shot 2015-01-20 at 22.32.28

The oil giant’s troubles could make it a takeover target, especially if the price of crude keeps falling

INVESTORS in BP are a patient bunch, and well rewarded for it. Britain’s third-largest company pays generous and reliable dividends, making it a mainstay of many private and institutional portfolios. But in the run-up to the oil giant’s quarterly results on February 3rd, some investors are jittery. Although BP’s dividend yield is a juicy 5.8%, its shares have fallen by a fifth over 10 years, greatly underperforming the broader market (see chart) and making total shareholder returns slightly negative. This is mainly because of the Deepwater Horizon disaster in the Gulf of Mexico in April 2010, which cost 11 lives and a stonking $43 billion (and maybe more) in fines, legal bills, compensation and clean-up. read more

Why A BP Shell Merger Is Not A Sensible Option

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Why A BP plc (BP) Royal Dutch Shell Merger Is Not A Sensible Option

Bidness Etc discusses how lower oil prices have impacted BP’s stock price, and why the merger with Royal Dutch Shell is not on the cards

By: MICHEAL KAUFMAN
Published: Jan 6, 2015 at 9:46 am EST

Crude oil prices have declined sharply this year. West Texas Intermediate (WTI) has already fallen below $50 per barrel for the first time in nearly five-and-half years, with Brent crude hovering around the same level. Several US oil companies are fighting for their survival, especially after the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain its current level of production. WTI and Brent crude were trading at $49.56 and $52.57 per barrel, respectively, during pre-market trading today. read more

Could Royal Dutch Shell buy BP?

Money Talks: Could Royal Dutch Shell Buy BP?

Screen Shot 2014-10-28 at 12.29.57Royal Dutch Shell’s rumoured takeover bid for BP is not as outlandish as first appears, according to Edmund Shing, global equity portfolio manager at BCS Asset Management.

Uploaded on YOUTUBE 9 DEC 2014

Since July, the collapse in world oil prices has been the talk of global financial markets. Brent crude oil, the global benchmark, has fallen from $115 per barrel to under $69 today, a price not seen since 2009.

This has been painful for investors holding oil & Gas stocks such as Royal Dutch Shell (RDS) or BP, with Royal Dutch Shell shareholders nursing losses of 10% since June, and BP shareholders an even more painful 15% loss since June.

There have been a number of consequences of this sharp oil price fall, one of which has been an increase in merger & acquisition activity in the global Oil & Gas sector. For instance in Oil Services, Halliburton is in the process of taking over US rival Baker Hughes for $35bn. read more

Shell must put BP out of its misery

Screen Shot 2014-10-28 at 11.51.59Article by Jeremy Warner published on 4 Jan 2015 in The Sunday Telegraph

Valued at nearly £140bn, Shell is today worth almost twice as much as BP. Shell must put BP out of its misery before anyone else pounces. Here’s an idea that has investment bankers drooling in anticipation, but needs to be killed off here and now before it becomes self fulfilling… I can’t speak for Shell, but I can report that there is absolutely no appetite for it within BP, which is as bemused as me by the rumours.

Here’s an idea that has investment bankers drooling in anticipation, but needs to be killed off here and now before it becomes self fulfilling – that the time may finally be ripe for Britain’s two oil majors, Royal Dutch Shell and BP, to bury the hatchet and merge, or rather, for the much stronger Shell to takeover the weakened BP.

I can’t speak for Shell, but I can report that there is absolutely no appetite for it within BP, which is as bemused as me by the rumours.

The concept is, of course, scarcely new. We know that exploratory talks have been held on several occasions in the past. Lord Browne, the former BP chief executive, no less, has admitted to them. read more

Big Oil will get even bigger

Screen Shot 2014-02-18 at 18.34.00FROM AN ARTICLE BY FIONA MAHARG-BRAVO PUBLISHED IN THE NEW YORK TIMES FRIDAY 2 JAN 2015

It’s not clear that Shell, the wallflower in the 1990s, will make a move. Exxon and other majors in the United States might be tempted. Either way, chances are Big Oil will get even bigger… 

There was $383 billion in mergers and acquisitions in the oil and gas sector last year, as of Dec. 11. Yet Europe has largely missed out: About three-quarters of the targets have been in North America, according to Thomson Reuters data. Shale has played a big role. In 2015, oil and gas bankers in Europe will get a bigger slice of the action.

The last big fall in oil prices, at the end of 2008, was too short to push a big merger and acquisition wave.

BP’s former chairman, John Browne, wrote in his memoir that a merger with Shell, pondered while he was at the helm, might have delivered $9 billion in annual synergies. read more

Shell BP Mega Merger: Fact, or extremely well informed conjecture?

It was this article, followed by the oil price crash, which led to the growing speculation about a Shell BP Mega Merger.

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By a confidential contributor.

Shell BP Mega Merger: Fact, or extremely well informed conjecture?

…its a typical dark, smoke-filled room where two teams of senior people – top echelon, Board level types, not the operational guys who run organizations these days – are discussing a thorny problem. The structure of the industry is changing: the mega-mergers of the 1990s, which brought BP to scale, saw ExxonMobil become the world’s biggest company and made Chevron and Texaco join hands are almost forgotten and a new world order has emerged. The state oil companies from the resurgent Russian and nascent Chinese super-powers now sit at the head of the negotiating table and the rules of the game are changing. Some of the world’s oldest and largest IOCs are no longer big enough to compete and its time, according to the bankers and consultants, for a ‘game changer’. Unless there a bold move is made, the under-funded pension pots and comfy Board appointments – not to mention more than one Royal family investment portfolio – are all at considerable risk. People are worried. read more

Real chance BP and Shell will merge

Screen Shot 2014-10-28 at 12.29.57Extracts from an article by David Taylor published by The Motley Fool on New Years Eve 2014 under the headline:

“Is It Safe To Stick With BP plc And Royal Dutch Shell plc, Or Should I Get Out?”

Royal Dutch Shell has five undeveloped projects in total (Carmon Creek, Bosi, Gato Do Mato, Bonga, Yucatan and Athabasca). They all require an oil price of at least US$95 per barrel to break-even. So yes, it’s not looking good on that front. Morgan Stanley says the price of oil could fall to as low as US$43 per barrel; …if the price falls further, there’s a real chance BP and Shell will merge, creating a potentially exciting investment opportunity. read more

The Fate of BP

Screen Shot 2014-10-28 at 12.29.57…if prices remain in the region of $60 per barrel, then the current scenario would be retained for a longer period of time, exposing it to takeover bids. Also, if Royal Dutch does indeed takeover BP, it could work out well for both companies.

Extracts from an article published by GuruFocus.com on 30 Dec 2014 under the headline:

British Petroleum Is A Buying Opportunity To Explore With “Sudden Dips” 

British Petroleum remains a buy, despite being a size lower than some of its competitors mentioned above. Its market capital of £74.6 billion ($116.5 billion) is dwarfed in terms of Royal Dutch Shells £208 billion ($323.85 billion), which might put it at risk considering the strategic issues at hand. With the uncertainly looming over the entire industry, experts feel that the company might be unsafe as a medium term investment, but there are clues to express otherwise.

According to sources like Forbes and IB-Times, Royal Dutch could be in the race to bid for some of the British oil major’s assets, which might sweep ion a new wave of optimism, putting in a position of a being a “buy” company. But since no confirmation has yet come through, there isn’t a credible source of attributing optimism for a price rise for BP shares on an immediate basis. read more

Tie-Up Between BP and Royal Dutch Shell In 2015?

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By: MICHEAL KAUFMAN
Published: Dec 29, 2014 at 2:17 pm EST

Ashley Armstrong, the Telegraph’s merger and acquisition columnist, hinted at the possibilityof a merger between London-based BP plc (NYSE:BP) and Netherlands-based Royal Dutch Shell plc (ADR) (NYSE:RDS.A) in a piece over the weekend.

M&A activity during 2014 reached the $3.5 trillion mark, the highest since the 2008 financial downturn. Ms. Armstrong expects more huge deals next year.

She thinks that the decline in commodity prices will act as a catalyst for M&A between mining and natural resources companies. Since this year’s peak in late June, crude oil prices have fallen 45% and are on track to record the biggest decline since the financial crisis. The slump in crude oil prices to $60 per barrel will negatively impact the profitability of some energy companies at the very least, and bring into question the business models of some businesses at worst. read more

Oil Price Bust Foreseen: Is Jesse Colombo a bone fide time traveler?

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“Time travel has captured the public imagination for much of the past century, but little has been done to actually search for time travelers. Here, three implementations of Internet searches for time travelers are described, all seeking a prescient mention of information not previously available.”

Perhaps Shell or BP may decide to hire Mr. Colombo and ask him about the timing of a mega merger, bearing in mind that he seems to know more about the oil industry than them? 

By John Donovan

A few days ago I published an article about Jesse Colombo, the economic analyst who correctly and uniquely, predicted the oil prices bust, which has an impact on every individual and country on the planet.

The collapse in oil prices might not be as highly ranked as the 9/11 terror attack in terms of an historic event, but it is of world-changing significance.

I found the Jesse Colombo article from June 2014 containing his prescient prediction published on the Forbes.com website.

This was in the course of carrying out some research into why the predictions of one of the worlds biggest oil companies, Royal Dutch Shell, has been so wildly inaccurate in regard to oil issues, such as when peak oil will occur. Shell has a “scenarios” team tasked with peering into the future with the objective of coming up with accurate forecasts. I wonder if they have foreseen their own future, which might be short as far as Shell is concerned? read more

Senior Sources See Merit In Shell BP Mega Merger

Screen Shot 2014-10-28 at 12.29.57“…the tumbling commodities price has meant that takeover chatter has spread to even the fantasy realms of BP and Shell. Once considered unthinkable, senior sources are now saying that there is merit in doing the colossal deal…”; “Companies will not be able to continue with business as usual and must either cut back on expensive exploration plans or cut their dividends, or both…” 

Major article by Ashley Armstrong published on page 5 of The Sunday Telegraph Business Section on 28 December 2014 under the headline:

“PIECES ON THE BOARD”

Extracts

One huge driver of dealmaking next year is expected to be the slump in commodity prices and with mining and natural resources companies accounting for 20pc of all London-listed companies a wave of merger mania can be expected in the City.

Oil prices that have slumped by 40pc since June to around $60 a barrel mean that “some resource companies are now uneconomical at best and at worse have unfeasible business models,” one dealmaker said.

“Companies will not be able to continue with business as usual and must either cut back on expensive exploration plans or cut their dividends, or both,” said Neil Passmore, chief executive at Hannam & Partners. read more

Oil executives predict wave of mergers: players to divide into predators and prey?

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“Executives predict a wave of mergers not seen since 1998, the last time the oil price suffered a precipitous and sustained fall.”

Extracts from a Danny Fortson article published on the front page and page 6 of The Sunday Times Business Section on 28 December 2014 under the headline:

“Oil explorers left high and dry by crude crisis”

How times change. Three years on, Afren, like many of its rivals, is on the ropes thanks to the halving of the oil price from its July high of $114 a barrel to $61. The drop has unleashed chaos in the markets as once-swashbuckling explorers find themselves buckling under debts they took on when the market was booming and with investors, already nursing heavy losses, who are unwilling to bail them out.

Executives predict a wave of mergers not seen since 1998, the last time the oil price suffered a precipitous and sustained fall.  read more

5 YEARS BEFORE OIL RETURNS TO $100 PER BARREL?

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Screen Shot 2014-02-18 at 18.34.00By John Donovan

The Trefis Team has published an extensive, highly informative article under the headline:

“Where Are Oil Prices Headed In The Long Run?”

It takes many factors into account before forecasting that annual average crude oil prices are likely to continue to decline in the short to medium term and bottom out by 2017, to reach $100 per barrel again by 2020.

This expert analysis will not be well received by Big Oil, its employees or Putin.

FULL ARTICLE

We can expect to see many more news reports like this one:

Chevron Withdraws From A Multi-Billion Dollar Project In Ukraine

US energy giant Chevron has informed Ukraine about its decision to pull out of a $10 billion shale gas exploration project. This comes as a big blow to the already war-torn economy of the country. The withdrawal of the project came a few months after Royal Dutch Shell also withdrew from a multi-billion dollar exploration project in the country. read more

Will 2015 Be The Year Of The Mega-Merger?

By John Donovan

Rupert Hargreaves of The Motley Fool raises the prospect in an article published today of potential mega-mergers in 2015, including a merger between Royal Dutch Shell and BP.

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He covers much of the same well-trodden ground in relation to Shell BP as in a flurry of recent articles by excited journalists, before concluding that a merger is unlikely, but not beyond the bounds of possibility.

Extract

Overall, then, there could be too many risks, uncertainties and hurdles to jump over for a deal between Shell and BP to go ahead. That being said, if the price is right, I’m sure Shell’s management would figure out a way to make the deal work so I wouldn’t rule out a deal completely. read more

Royal Dutch Shell BP Plc

Screen Shot 2014-10-28 at 12.29.57What’s next for Royal Dutch Shell? Is a multi-billion merger with BP just around the corner?

Article by Alessandro Pasetti published by The Motley Fool 8 Dec 2014

What’s next for Royal Dutch Shell? Is a multi-billion merger with BP just around the corner? Takeover rumours in the oil industry often emerge when oil prices weaken, and this time is no different. A Shell/BP tie-up would have to be financed by Shell equity, and is unclear why BP shareholders would want to hold Shell stock right now, unless a big premium were offered. Regulatory hurdles won’t be easy to overcome, which heightens execution risk. If Shell risks a multi-billion takeover, its shareholders could be the ultimate losers at a time margins are strained, the cost of extracting oil and gas is on its way up, and a few projects are pushed back or cancelled. read more

Oil price slump could trigger a wave of takeovers and mergers of desperation

Screen Shot 2014-10-28 at 12.29.57The author of The Sunday Times article, Danny Fortson, goes on to point out that the oil price slump could lead to a wave of big takeovers, failures and “mergers of desperation,” with BP a potential takeover target…

By John Donovan

Coverage of the problems facing BP are spread over a number of pages of The Sunday Times Business section today.

Screen Shot 2014-12-08 at 16.07.22BP is responding to the fall in oil prices by slashing middle management and freezing projects that were based on an assumption that oil prices would remain at around $100 a barrel. Shell is likely to do the same.

The most prominent article, by Danny Fortson, describes BP’s involvement with the Putin regime as playing Russian roulette. He goes on to point out that the oil price slump could lead to a wave of big takeovers, failures and “mergers of desperation,” with BP a potential takeover target (also as a consequence of the Gulf spill). read more

Authorities likely to wave through a Shell BP merger

Screen Shot 2014-10-28 at 12.29.57EXTRACTS FROM A FORBES.COM ARTICLE BY TIM WORSTALL PUBLISHED 6 DECEMBER 2014

If Royal Dutch Shell Buys BP Should The Authorities Ban The Purchase?

There’s interesting (and fun!) rumors floating around the London market that Royal Dutch Shell might attempt to purchase BP. These sorts of mergers (or takeovers) aren’t unusual in a commodity business like oil at a time of weak prices.

Here’s the story swirling around:

One of Britain’s oldest oil companies BP could be about to be sold to its biggest rival for a fiver per share.

The rumoured deal, if realised, would complete one of the most ignominious falls for the once great Persian Oil company that powered Britain’s Navy to victory during the First World War. read more

BP a sitting duck

Screen Shot 2014-10-28 at 12.29.57The rumours that surfaced earlier this week that Shell might be taking a closer look at BP are not that ridiculous and in the current climate of lower oil prices and falling profits they actually make perfect sense. The first reason is that BP looks like a sitting duck.

THE TELEGRAPH

Why Shell could buy BP for just £5 a share

One of Britain’s largest and oldest oil companies BP could be about to be sold for just £5 per share

By John Ficenec 05 Dec 2014

One of Britain’s oldest oil companies BP could be about to be sold to its biggest rival for a fiver per share.

The rumoured deal, if realised, would complete one of the most ignominious falls for the once great Persian Oil company that powered Britain’s Navy to victory during the First World War.

BP is now a sitting duck after the Gulf of Mexico disaster, Russian sanctions and the falling oil price combined to drive down the share price to £4.25. Analysts estimate the deal could be done if rival Shell offers a 16pc premium to that price, or about £5, to seal one of the biggest corporate takeovers in the history of the oil industry. read more

Shell BP: Return of the megamerger?

Screen Shot 2014-10-28 at 12.29.57Shell talked internally and with bankers about merging with BP and BG Group PLC, said people involved in those talks. Such deals are complicated, but also offer the most potential upside, said Oppenheimer’s Mr. Gheit, because of potentially economies of scale.

 (FROM THE WALL STREET JOURNAL: FRIDAY 5 DECEMBER 2014)

Will Cheap Oil Lead To A New Merger Wave?

By Justin Scheck and Shayndi Raice

When oil prices hit a trough, history points to a likely energy industry response: mergers and acquisitions.

Price crashes in the early 1980s and late 1990s sparked a rash of deal-making that reshaped the industry. A decline in the mid-2000s led the giant firms to pick up smaller companies. Now, with oil’s price down 40% since June, bankers and investors are hoping for a repeat.

Traders are betting on it: BP PLC shares jumped by close to 5% Tuesday after an anonymous Twitter user claimed rival Royal Dutch Shell PLC was going to make a bid. Spokesmen for BP and Shell declined to comment. read more

Prospects of a Shell BP merger

Screen Shot 2014-10-28 at 12.29.57FROM A REGULAR CONTRIBUTOR

Firstly, falls in oil price and resulting low stock prices tend to result in waves of takeovers.

Examples during the low price era of the late 1990s – early 2000s:

· Exxon took over Mobil
· Statoil took over Saga, Norsk Hydro
· Chevron took over Texaco, Unocal
· Total took over Fina and Elf
· BP took over Vastar, Amoco and Arco

Shell is notably absent from this list – over the past ten years the gossip on the street has considered possible mergers involving Shell, BP and Total and even the demerger of Shell Oil, but the numbers apparently did not add up. Perhaps the fall in share prices over the past six months and a lack of exploration opportunities has once again made mergers more attractive than organic growth. read more

American as Chairman Good Politics for Shell

Screen Shot 2014-10-30 at 11.28.57From a Regular Contributor

I see Shell got an American as its new chairman.

(Chad Holliday right).

Not certain that is good news for the shareholders, although it is clearly good politics.

Shell needs extensions to its leases in the Arctic and with an American arguing the issue they might succeed.

If he saves Shell’s $6 billion investment he will have earned his salary.

Shell also knows there is a bunch of oil and gas in those structures they want to drill. And so the rumors of a Shell/BP merger are not to be dismissed. A merger would give Shell BP’s interest in Alaska, unless the USG objected. read more

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