New BP plc CEO Tony Hayward
took the opportunity at the company’s second-quarter earnings release to
dispel a nagging market rumor that resurfaced a few weeks ago: that BP was in
merger talks with
Royal Dutch
Shell Group plc. Of course such a combination would make sense: Both are
European oil giants that would benefit from sharing operations and realizing
synergies, and both have had their share of problems in recent years —for
Shell, admitting that it had fudged its oil reserve numbers, and for BP, a
deadly refinery explosion, pipeline oil leak in Alaska and the departure of
CEO John Browne in May after he disclosed he had lied under oath about a
homosexual relationship. Hayward also told reporters that BP doesn’t have
plans to merge with Russian state-owned gas monopoly
Gazprom (to which
it sold a vast Siberian gas field in June for what many believed to be a
bargain price of $700 million to $900 million), although he said it could
contribute natural gas transportation, processing and storage assets to a
joint venture with the company. So how were BP’s earnings? On a net basis,
they rose 1.5% to $7.38 billion, mostly because of $741 million in gains from
the sale of a refinery in Britain to Switzerland's
Petroplus
Holdings plc for $1.4 billion and oil fields and a West Texas pipeline to
Occidental
Petroleum Corp. in a cash-and-asset swap. But stripping out those gains
and changes in inventory values, earnings did drop 13% to $5.35 billion.
Still, analysts seemed to be cheered by the news that maybe BP is turning
things around — and that Hayward is looking to do it alone. — Claire Poole
Tags: British Petroleum, Royal Dutch Shell Group
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