BP Strikes $1.8 Billion Deal for 10% Stake in UAE Oil Fields
December 17 2016 - 7:25AM
Dow Jones News
By Sarah Kent
LONDON-- BP has traded a 2% stake in the company for a 10%
interest in one of the last big oil concessions available in the
Middle East, the company said Saturday, ending a yearslong standoff
over the terms to gain access to the license in the United Arab
Emirates.
The all share deal, worth roughly GBP1.8 billion ($2.2 billion),
gives BP access to onshore oil fields containing 20-30 billion
barrels of oil equivalent over the 40-year term of the contract. It
will provide BP with 165,000 barrels of oil equivalent a day as
well as longer-term and low-cost growth prospects.
The deal comes as oil prices begin to show signs of recovering
after a two-year slump, boosted by an agreement between major
producers--including the U. A. E.--to cut back output.
The agreement between the U.A.E. and BP is the latest success
for Abu Dhabi in a drawn-out negotiation process between the
Emirate and international oil companies for concession rights.
Talks have intermittently stalled for years over the terms demanded
by the Gulf state.
Total SA set the benchmark for a deal last year, after the
French oil major agreed to a $2.2 billion sign-on fee in return for
a 10% in the concession and $2.85 for every barrel of oil sold. At
the time, voices from within the industry didn't see the deal as
being favorable, particularly as low prices intensified companies'
scrutiny of deal values. BP and Royal Dutch Shell PLC hesitated to
complete similar deals.
Since then, Japan's INPEX Corp. and GS Energy of South Korea
have also taken smaller stakes in the concession.
BP is likely to have received a similar per barrel fee to Total
for its interest in the oil field, though the company did not
disclose details. It will become a 10% shareholder in the Abu Dhabi
Company for Onshore Petroleum Operations Limited, or Adco, which
operates the concession.
Write to Sarah Kent at sarah.kent@wsj.com
(END) Dow Jones Newswires
December 17, 2016 07:10 ET (12:10 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
BP (NYSE:BP)
Historical Stock Chart
From Mar 2024 to Apr 2024
BP (NYSE:BP)
Historical Stock Chart
From Apr 2023 to Apr 2024
