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BP Considered for Takeover by ADNOC but Deemed Unsuitable
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BP plc (BP - Free Report) has been highlighted as a potential acquisition target due to its underperformance compared to its peers, per a Reuters report.
The Abu Dhabi National Oil Company (“ADNOC”) had shown preliminary interest in acquiring BP but decided against advancing the discussions, deeming BP not a suitable fit for its strategic ambitions. This decision was influenced by various factors, including political considerations.
BP, valued at $110.3 billion, has struggled to keep pace with its competitors, a factor that analysts and investors point to as a significant reason behind its vulnerability to takeovers. The situation is further complicated by the global energy market’s dynamics, where U.S. oil giants are actively consolidating, a trend not mirrored by European majors such as BP.
The company’s proactive shift toward reducing fossil fuel production and increasing investment in renewable energy has not been favorably received by all investors. Earlier this year, BP scaled back some of its ambitious energy transition plans, a move that followed some pushback from its shareholders.
Meanwhile, ADNOC has been bolstering its capabilities in oil and gas production. Under the leadership of CEO Sultan al-Jaber, ADNOC is shaping up to match the profile of a global oil major. Not publicly traded, ADNOC’s robust financial standing enables it to consider significant acquisitions, including potentially large stakes in other oil majors.
ADNOC’s strategic interests also encompass investments in renewable energy, petrochemicals and LNG as part of its broader international expansion goals. These moves align with the UAE’s broader strategy to transition to a more diverse energy mix.
BP and ADNOC have a longstanding collaborative relationship, spanning more than five decades. They recently expanded their cooperation through a joint venture aimed at developing gas assets in Egypt and attempted to secure a significant stake in Israeli gas producer NewMed in 2023, although this initiative has been paused due to regional conflicts.
Price Performance
Shares of BP have underperformed the industry in the past three months. The stock has risen 15.1% compared with the industry’s 15.8% growth.
SM Energy Company (SM - Free Report) is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of oil and gas in North America. SM currently has a Momentum Score of A and a Value Score of B.
The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $5.99 and $6.44, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Enerplus Corporation (ERF - Free Report) is an independent oil and gas production company with resources across Western Canada and the United States.
Enerplus has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days. The consensus estimate for ERF’s 2024 and 2025 earnings per share is pegged at $1.95 and $2.25, respectively.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 30 days, GLP has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 EPS is pegged at $3.90 and $4.47, respectively. GLP currently has a Value Score of A.
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BP Considered for Takeover by ADNOC but Deemed Unsuitable
BP plc (BP - Free Report) has been highlighted as a potential acquisition target due to its underperformance compared to its peers, per a Reuters report.
The Abu Dhabi National Oil Company (“ADNOC”) had shown preliminary interest in acquiring BP but decided against advancing the discussions, deeming BP not a suitable fit for its strategic ambitions. This decision was influenced by various factors, including political considerations.
BP, valued at $110.3 billion, has struggled to keep pace with its competitors, a factor that analysts and investors point to as a significant reason behind its vulnerability to takeovers. The situation is further complicated by the global energy market’s dynamics, where U.S. oil giants are actively consolidating, a trend not mirrored by European majors such as BP.
The company’s proactive shift toward reducing fossil fuel production and increasing investment in renewable energy has not been favorably received by all investors. Earlier this year, BP scaled back some of its ambitious energy transition plans, a move that followed some pushback from its shareholders.
Meanwhile, ADNOC has been bolstering its capabilities in oil and gas production. Under the leadership of CEO Sultan al-Jaber, ADNOC is shaping up to match the profile of a global oil major. Not publicly traded, ADNOC’s robust financial standing enables it to consider significant acquisitions, including potentially large stakes in other oil majors.
ADNOC’s strategic interests also encompass investments in renewable energy, petrochemicals and LNG as part of its broader international expansion goals. These moves align with the UAE’s broader strategy to transition to a more diverse energy mix.
BP and ADNOC have a longstanding collaborative relationship, spanning more than five decades. They recently expanded their cooperation through a joint venture aimed at developing gas assets in Egypt and attempted to secure a significant stake in Israeli gas producer NewMed in 2023, although this initiative has been paused due to regional conflicts.
Price Performance
Shares of BP have underperformed the industry in the past three months. The stock has risen 15.1% compared with the industry’s 15.8% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Currently, BP carries a Zack Rank #3 (Hold).
Investors interested in the energy sector might look at the following companies that presently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company (SM - Free Report) is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of oil and gas in North America. SM currently has a Momentum Score of A and a Value Score of B.
The Zacks Consensus Estimate for SM’s 2024 and 2025 EPS is pegged at $5.99 and $6.44, respectively. The stock has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days.
Enerplus Corporation (ERF - Free Report) is an independent oil and gas production company with resources across Western Canada and the United States.
Enerplus has witnessed upward earnings estimate revisions for 2024 and 2025 in the past seven days. The consensus estimate for ERF’s 2024 and 2025 earnings per share is pegged at $1.95 and $2.25, respectively.
Global Partners (GLP - Free Report) is a leading operator of gasoline stations and convenience stores. Over the past 30 days, GLP has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
The Zacks Consensus Estimate for Global Partners’ 2024 and 2025 EPS is pegged at $3.90 and $4.47, respectively. GLP currently has a Value Score of A.