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BP, Reliance to Invest $6 Billion in Gas Blocks in India
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BP plc (BP - Free Report) and Reliance Industries have planned an investment of $6 billion to augment India’s gas output from an east coast block, D6. The companies are collaborating after eight years and plan to work in an area where both face troubles while increasing their production.
These companies aim to expand their tie-up in order to meet the South Asian nation's growing fuel and renewable energy demand. India is substituting China as the driver of fuel demand growth globally. Per the International Energy Agency, India is expected to account for 25% of global energy use by 2040.
BP targets to sell fuel in India in collaboration with Reliance, which runs the world's biggest refining complex and is chaired by billionaire Mukesh Ambani.
BP has a license to sell jet fuel and construct 3,500 fuel stations in India. Per India's pricing formula, higher profits is given to retailers with refining plants or domestic supply sources.
Ambani stated that the partnership would also look at opportunities in trading that could include products such as oil, gas, fuels, liquefied natural gas (LNG), power, and carbon.
BP’S CEO wants to draw level with production volumes of its biggest rivals ExxonMobil Corporation (XOM - Free Report) and Royal Dutch Shell plc . Therefore, it is banking on Indian policy moves and a favorable investment climate to unlock the resources.
BP has decided to revive gas sales joint venture with Reliance. The companies aspire to develop about 3 trillion cubic feet of resources that will result in incremental output of 30-35 million cubic meters a day between 2020 and 2022 from the D6 block in the Krishna Godavari basin. This will facilitate India's gradual shift to a gas-based economy.
In 2011, BP entered into India's exploration sector when it inked a $7.2 billion deal to acquire a 30% stake in some oil and gas blocks operated by Reliance. It created gas sourcing and marketing tie-ups with the Indian conglomerate. The gas joint venture is marketing some of the LNG sourced from BP's portfolio.
The initial contract awards will be given by the companies for work in the R-series ultra-deep water gas fields in the block, lying 70 kilometers offshore. Plans for development of the satellite and D-55 fields in the block will be presented to the government before the end of 2017.
Gas production from the KG-D6 block has declined by over 85% from its peak in 2010. Output was about 7.4 million cubic meters a day in the quarter ended March 2017, compared with 54.5 million in the three months ended December 2010, just before BP purchased a 30% stake.
Investor confidence on the BP stock is reflected in its price chart. Shares of the company gained 2.7% in the last three months, while the Zacks categorized Oil & Gas – International Integrated industry registered a decline of 1.0% in the same time span.
BP currently has a Zacks Rank #3 (Hold). Another better-ranked stock from the same space includes Enbridge Energy, L.P. , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy posted a positive earnings surprise of 120% in the preceding quarter. The company beat estimates in two of the four trailing quarters with an average negative earnings surprise of 35.78%.
Enbridge Energy posted a positive earnings surprise of 128.57% in the preceding quarter. The company beat estimates in three of the four trailing quarters with an average positive earnings surprise of 38.22%.
Canadian Natural Resources posted a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the four trailing quarters with an average negative earnings surprise of 275.46%.
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BP, Reliance to Invest $6 Billion in Gas Blocks in India
BP plc (BP - Free Report) and Reliance Industries have planned an investment of $6 billion to augment India’s gas output from an east coast block, D6. The companies are collaborating after eight years and plan to work in an area where both face troubles while increasing their production.
These companies aim to expand their tie-up in order to meet the South Asian nation's growing fuel and renewable energy demand. India is substituting China as the driver of fuel demand growth globally. Per the International Energy Agency, India is expected to account for 25% of global energy use by 2040.
BP targets to sell fuel in India in collaboration with Reliance, which runs the world's biggest refining complex and is chaired by billionaire Mukesh Ambani.
BP has a license to sell jet fuel and construct 3,500 fuel stations in India. Per India's pricing formula, higher profits is given to retailers with refining plants or domestic supply sources.
Ambani stated that the partnership would also look at opportunities in trading that could include products such as oil, gas, fuels, liquefied natural gas (LNG), power, and carbon.
BP’S CEO wants to draw level with production volumes of its biggest rivals ExxonMobil Corporation (XOM - Free Report) and Royal Dutch Shell plc . Therefore, it is banking on Indian policy moves and a favorable investment climate to unlock the resources.
BP has decided to revive gas sales joint venture with Reliance. The companies aspire to develop about 3 trillion cubic feet of resources that will result in incremental output of 30-35 million cubic meters a day between 2020 and 2022 from the D6 block in the Krishna Godavari basin. This will facilitate India's gradual shift to a gas-based economy.
In 2011, BP entered into India's exploration sector when it inked a $7.2 billion deal to acquire a 30% stake in some oil and gas blocks operated by Reliance. It created gas sourcing and marketing tie-ups with the Indian conglomerate. The gas joint venture is marketing some of the LNG sourced from BP's portfolio.
The initial contract awards will be given by the companies for work in the R-series ultra-deep water gas fields in the block, lying 70 kilometers offshore. Plans for development of the satellite and D-55 fields in the block will be presented to the government before the end of 2017.
Gas production from the KG-D6 block has declined by over 85% from its peak in 2010. Output was about 7.4 million cubic meters a day in the quarter ended March 2017, compared with 54.5 million in the three months ended December 2010, just before BP purchased a 30% stake.
Investor confidence on the BP stock is reflected in its price chart. Shares of the company gained 2.7% in the last three months, while the Zacks categorized Oil & Gas – International Integrated industry registered a decline of 1.0% in the same time span.
BP currently has a Zacks Rank #3 (Hold). Another better-ranked stock from the same space includes Enbridge Energy, L.P. , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SunCoke Energy posted a positive earnings surprise of 120% in the preceding quarter. The company beat estimates in two of the four trailing quarters with an average negative earnings surprise of 35.78%.
Enbridge Energy posted a positive earnings surprise of 128.57% in the preceding quarter. The company beat estimates in three of the four trailing quarters with an average positive earnings surprise of 38.22%.
Canadian Natural Resources posted a positive earnings surprise of 30.77% in the preceding quarter. It surpassed estimates in two of the four trailing quarters with an average negative earnings surprise of 275.46%.
3 Top Picks to Ride the Hottest Tech Trend
Zacks just released a Special Report to guide you through a space that has already begun to transform our entire economy...
Last year, it was generating $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for those who make the right trades early. Download Report with 3 Top Tech Stocks >>