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BP p.l.c. Message Board

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  • davenport_mba davenport_mba Oct 24, 2012 7:40 PM Flag

    Question for the board - BP`s Equity Interest in Rosneft

    Your question is excellent. My contribution will be qualitative. I own BP shares.

    My take is that BP's investment will turn out to be problematic, and not deliver the pro-forma results as would be indicated by the deal structure. Profits will be locked in Rosneft undistributed, and those locked up profits will have Russian politics, game playing, and fumbling at work.

    I would expect the deal to fall apart, and for BP to sell out at a fire sale price just like it has fire sold other recent problematic assets. In theory, BP traded a $35B income stream over the next 10 years with TNK-BP for a Rosneft income stream of $5B over the same period, and will probably end up selling the Rosneft stake in less than 10 years for pennies on the dollar.

    The upshort is that I believe we lost $10-$20B of value in the process. BP's market value has already adjusted something of that order of magnitude as a result. This is not the growth and asset realization we wanted.

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