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BP, ConocoPhillips in Talks to Sign Asset Swap Agreement

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Per Bloomberg, BP plc (BP - Free Report) and ConocoPhillips (COP - Free Report) are in talks over an asset swap deal. Per the agreement, BP will raise stake in the North Sea Clair field, offshore U.K., in exchange of its assets in Alaska.

BP is contemplating to acquire ConocoPhillips’ 24% interest in the Clair field. BP, the operator of the field, already has a holding of 28.6%. In return, ConocoPhillips will acquire some of BP’s assets in Alaska. The companies did not disclose any details.

Per BP, Clair is the largest undeveloped hydrocarbon resource in the U.K. continental shelf. Global oil giants including BP are making a shift in their portfolios by divesting their mature North Sea assets and investing in areas where it’s cheaper to produce oil and natural gas. As new players are investing additional capital and introducing new technology, the region is undergoing a revival. BP intends to focus on a few projects as it aims higher output.

Per sources, the companies have not reached any final decision and talks regarding the deal may fall apart. The sources were not aware of the exact Alaskan assets that were being auctioned. Among BP’s holdings, Prudhoe Bay is the biggest field. The field commenced production in the 1970s.

ConocoPhillips has been consistently trying to focus on the shale in the United States. Evidently, the company increased its exploration activity in Alaska. In 2017, it turned out to be the largest oil producer in the region. In February 2018, the company announced a deal to acquire a stake in Anadarko Petroleum Corp.’s project on the western North Slope, including an interest in the Alpine pipeline. Meanwhile, ConocoPhillips has been lowering its exposure to the U.K., as fields in the region mature. According to an announcement made by ConocoPhillips in April, it proposes to cut 450 jobs in Britain between Oct 1, 2018 and April 2020 as well as close output through its Theddlethorpe Gas Terminal.

ConocoPhillips is the operator or has interests in other U.K. fields, including Britannia, Judy and Galleon.

Price Performance

During the past three months, BP’s shares have gained 21.9% compared with the industry’s 21% rally.



 

Zacks Rank & Key Pick

BP currently sports a Zacks Rank #1 (Strong Buy).

Another top-ranked player in the same sector is Equinor ASA (EQNR - Free Report) ,  which sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Equinor, based in Norway, is a major international integrated oil and gas company. It has an average positive earnings surprise of 11.53% in the last four quarters.

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