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BP in Talks to Offload Aging Trinidad Gas Assets to Perenco

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BP plc (BP - Free Report) , a multinational oil and gas giant, is on the verge of finalizing an agreement to offload a portion of its Trinidad and Tobago oil and gas assets to Anglo-French oil company Perenco, per a Reuters report.This strategic move comes amid discussions surrounding BP's declining gas output and its plans for collaborative ventures in the Caribbean.

BP stands as the largest natural gas producer in Trinidad, boasting an output of more than 1.3 billion cubic feet per day (bcf/day). The majority of this output is exported to Europe and Latin America in the form of liquefied natural gas (LNG). However, BP's gas production has witnessed a notable decline of nearly 1 bcf/day over the past five years. Approximately 18% of the company's LNG production originated from the Caribbean Island in 2022.

In light of the declining gas output, BP is in discussions with both Trinidad and Tobago and Venezuela to jointly develop an offshore gas field in the Caribbean.

Simultaneously, negotiations with Perenco center around the potential divestment of BP's Amherstia, Cashima and Immortelle fields. These fields, with a combined output of close to 2 bcf/d in 2004, have experienced significant declines, currently producing just under 200 million cubic feet per day.

While both BP and Perenco have refrained from commenting on the negotiations, insiders anticipate a deal announcement before the end of summer, per the report. The specifics of the proposed deal, including the price under discussion, remain undisclosed at present. Trinidad and Tobago's minister of Energy, Stuart Young, is yet to provide official commentary on the potential sale.

Perenco, with its extensive operations across Africa, Latin America and Europe, boasts a global net production of 420,000 barrels of oil equivalent per day (boe/d). Its existing asset in Trinidad, the Teak Samman Poui field, contributes 10,000 boe/d to this figure.

BP's operations in Trinidad, primarily concentrated in the Columbus Basin, have yielded significant gas and oil discoveries over the years. Looking ahead, BP's focus on exploring the relatively untapped deep-water province within the Columbus Basin underscores its commitment to long-term sustainability and growth in the region.

As negotiations progress, the potential divestment of BP's Trinidad assets to Perenco marks a strategic realignment in the Caribbean energy landscape, with implications for both companies and the broader industry.

Zacks Rank & Key Picks

BP currently carries a Zack Rank #3 (Hold).

Some better-ranked stocks in the energy sector are Murphy USA Inc. (MUSA - Free Report) , Global Partners (GLP - Free Report) and Sunoco LP (SUN - Free Report) . While Murphy USA and Global Partners sport a Zacks Rank #1 (Strong Buy), Sunoco LP carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA is a leading independent retailer of motor fuel and convenience merchandise in the United States.

The Zacks Consensus Estimate for MUSA’s 2024 EPS is pegged at $26.35. The company has a Zacks Style Score of B for Growth and B for Value. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.

Global Partners is a leading operator of gasoline stations and convenience stores. Over the past 60 days, GLP has witnessed upward earnings estimate revisions for 2023 and 2024.

The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 EPS is pegged at $3.90 and $4.47, respectively. GLP currently has a Zacks Style Score of A for Value.

Sunoco is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. By distributing more than 10 fuel brands via 10,000 convenience stores under long-term distribution contracts, the partnership will continue to generate stable cash flow. 

The Zacks Consensus Estimate for SUN’s 2024 earnings per share (EPS) is pegged at $4.96. The company has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 30 days.

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