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BP And ADNOC Propose to Acquire 50% Stake in NewMed for $2B
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BP plc (BP - Free Report) and Abu Dhabi National Oil Company (“ADNOC”) made a proposal to acquire a 50% stake in Israel-based offshore natural gas producer, NewMed Energy, for $2 billion.
As part of the deal, BP and ADNOC will form a joint venture focused on gas development in international areas of mutual interest, including the East Mediterranean. The deal will mark the company’s entry into Israel’s expanding energy sector.
The deal can potentially draw significant investment into the Israel energy sector. BP and ADNOC will acquire 45% of NewMed’s free-floating shares and an additional 5% owned by Israel-based conglomerate Delek Group. They have made a non-binding offer of 12.05 shekels for each share.
Once the deal closes, NewMed will become a private corporation, which will be equally held by the BP-ADNOC joint venture and Delek Group. Delek Group holds the remaining 50% stake in NewMed.
NewMed is the largest shareholder in the giant Leviathan offshore field, which produces 12 billion cubic meters (bcm) of gas supplied to Israel, Egypt and Jordan. The field partners are planning to double production to 21-24 bcm by 2027.
NewMed is also planning to develop Israel’s first liquefied natural gas export terminal to further boost exports. With a capacity of 4.5 million tons, the facility will be one of the largest floating liquefaction facilities in the world.
The move will strengthen BP’s presence in the eastern Mediterranean. The decision came after BP delayed its shift from oil and gas, and pledged to boost spending on renewables and low-carbon fuel by $8 billion by 2030.
The imperative to reduce the consequences of climate change becomes more important with each passing day. The potential acquisition reflects BP's commitment to sustainability.
Price Performance
Shares of BP have outperformed the industry in the past six months. The stock has gained 31.1% compared with the industry’s 17.8% growth.
W&T Offshore, Inc.’s (WTI - Free Report) fourth-quarter 2022 adjusted earnings (excluding one-time items) of 10 cents per share beat the Zacks Consensus Estimate of 3 cents. The strong quarterly results were driven by higher production and the realization of commodity prices.
W&T Offshore has been generating positive free cash flows for 20 consecutive quarters. In 2022, the company’s free cash flow of $376.4 million increased fourfold from $90.9 million reported a year ago. This reflects the company’s strong operations.
Liberty Energy Inc.’s (LBRT - Free Report) fourth-quarter 2022 earnings per share of 82 cents handily beat the Zacks Consensus Estimate of 71 cents. The outperformance reflects the impacts of strong execution and increased service pricing.
As part of its shareholder return policy, LBRT repurchased $125 million of its stock at an average price of $15.29 a piece since July and reinstated a quarterly cash dividend of 5 cents per share in the fourth quarter.
Valero Energy Corporation’s (VLO - Free Report) fourth-quarter 2022 adjusted earnings of $8.45 per share beat the Zacks Consensus Estimate of $7.45 per share. The strong quarterly results were driven by increased refinery throughput volumes and a higher refining margin.
Valero can benefit from the Gulf Coast export volumes as fuel demand recovery gets support from Asia economies. The Gulf Coast contributed 59.4% to the total throughput volume in the fourth quarter of 2022.
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BP And ADNOC Propose to Acquire 50% Stake in NewMed for $2B
BP plc (BP - Free Report) and Abu Dhabi National Oil Company (“ADNOC”) made a proposal to acquire a 50% stake in Israel-based offshore natural gas producer, NewMed Energy, for $2 billion.
As part of the deal, BP and ADNOC will form a joint venture focused on gas development in international areas of mutual interest, including the East Mediterranean. The deal will mark the company’s entry into Israel’s expanding energy sector.
The deal can potentially draw significant investment into the Israel energy sector. BP and ADNOC will acquire 45% of NewMed’s free-floating shares and an additional 5% owned by Israel-based conglomerate Delek Group. They have made a non-binding offer of 12.05 shekels for each share.
Once the deal closes, NewMed will become a private corporation, which will be equally held by the BP-ADNOC joint venture and Delek Group. Delek Group holds the remaining 50% stake in NewMed.
NewMed is the largest shareholder in the giant Leviathan offshore field, which produces 12 billion cubic meters (bcm) of gas supplied to Israel, Egypt and Jordan. The field partners are planning to double production to 21-24 bcm by 2027.
NewMed is also planning to develop Israel’s first liquefied natural gas export terminal to further boost exports. With a capacity of 4.5 million tons, the facility will be one of the largest floating liquefaction facilities in the world.
The move will strengthen BP’s presence in the eastern Mediterranean. The decision came after BP delayed its shift from oil and gas, and pledged to boost spending on renewables and low-carbon fuel by $8 billion by 2030.
The imperative to reduce the consequences of climate change becomes more important with each passing day. The potential acquisition reflects BP's commitment to sustainability.
Price Performance
Shares of BP have outperformed the industry in the past six months. The stock has gained 31.1% compared with the industry’s 17.8% growth.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
W&T Offshore, Inc.’s (WTI - Free Report) fourth-quarter 2022 adjusted earnings (excluding one-time items) of 10 cents per share beat the Zacks Consensus Estimate of 3 cents. The strong quarterly results were driven by higher production and the realization of commodity prices.
W&T Offshore has been generating positive free cash flows for 20 consecutive quarters. In 2022, the company’s free cash flow of $376.4 million increased fourfold from $90.9 million reported a year ago. This reflects the company’s strong operations.
Liberty Energy Inc.’s (LBRT - Free Report) fourth-quarter 2022 earnings per share of 82 cents handily beat the Zacks Consensus Estimate of 71 cents. The outperformance reflects the impacts of strong execution and increased service pricing.
As part of its shareholder return policy, LBRT repurchased $125 million of its stock at an average price of $15.29 a piece since July and reinstated a quarterly cash dividend of 5 cents per share in the fourth quarter.
Valero Energy Corporation’s (VLO - Free Report) fourth-quarter 2022 adjusted earnings of $8.45 per share beat the Zacks Consensus Estimate of $7.45 per share. The strong quarterly results were driven by increased refinery throughput volumes and a higher refining margin.
Valero can benefit from the Gulf Coast export volumes as fuel demand recovery gets support from Asia economies. The Gulf Coast contributed 59.4% to the total throughput volume in the fourth quarter of 2022.