Reports suggest BP plans to buy back $6 billion in stock. The move tends to nudge up the share price, which it has.
It’s a common step in the corporate acquisition dance — when a company senses buyers out there, says fund manager Colin McLean at SVM Asset Management. BP’s value to potential suitors: It’s a low-cost source of oil production.
“It would be a cheap way of buying barrels of oil already discovered and cash flows you know, for someone to buy BP,” says McLean.
In recent months, BP’s untangled itself a bit from a headache Russian investment. As for the Gulf spill, the company will pay $4.5 billion to settle criminal and some civil charges.
“We’re relatively close to perhaps resolving some of those issues. It may even be that if the remaining issue is a U.S. one that an acquirer from the U.S. might be better placed to resolve that or understand that,” says McLean.
That refers to environmental liability in the Gulf. A trial’s scheduled for February. After that, BP’s future could clear up as a more stable, smaller firm. At this price, BP may stand for Bargain Petroleum.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.