BP Expands Green Footprint With Lightsource BP Acquisition
BP plc BP announced the acquisition of the remaining 50.03% stake in Lightsource BP, a leading solar and battery storage developer. The deal, valued at approximately $322 million (£254 million), marks a milestone in BP's commitment to expanding its presence in the renewable energy sector.
Operating with a proven capital-light business model, Lightsource BP specializes in developing, engineering, constructing, and farming down utility-scale solar and battery storage projects. The company has built a solid reputation for delivering renewable projects with equity returns in the mid-teens, thanks to its strategic approach of selling its majority interests in assets to partners.
Over the years, the company has grown exponentially, operating in 19 countries, developing 8.4 gigawatts (GW) of solar capacity and maintaining an impressive 61-GW development pipeline.
The acquisition will give BP full ownership of Lightsource BP, providing the energy giant with the opportunity to leverage its capabilities and strengths in areas such as finance and trading. The move aligns with BP's broader strategy to diversify its portfolio and transition toward cleaner and more sustainable energy sources. It is also in sync with BP's strategy to attain double-digit equity returns from the renewable energy business.
Additionally, the company plans to utilize Lightsource BP's expertise as a developer of cost-competitive onshore renewable power to meet its own growing demand for low-carbon power.
The acquisition's structured and competitively priced terms reflect market conditions, with a consideration structure aimed toward performance. BP may explore the possibility of unlocking further value by bringing in a strategic partner into the business. Subject to regulatory approvals, the acquisition is expected to close in mid-2024.
Zacks Rank & Key Picks
BP currently carries a Zack Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Matador Resources Company MTDR, Liberty Energy Inc. LBRT and Oceaneering International, Inc. OII. While Matador Resources sports a Zacks Rank #1 (Strong Buy), both Liberty Energy and Oceaneering International carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Matador Resources is among the leading oil and gas explorers in the shale and unconventional resources in the United States. The company’s prime intention is to create more value for shareholders and generate lucrative returns from the capital invested in unconventional plays.
MTDR’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.89%.
Liberty Energy is a North American provider of hydraulic fracturing services to upstream energy operators. The company’s multi-basin presence offers an attractive upside opportunity compared with most of its peers. Liberty's strong relationship with high-quality customers provides revenue visibility and business certainty.
LBRT’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.88%.
Oceaneering International is a leading provider of integrated technology solutions, active at all phases of the offshore oilfield lifecycle. Its strong relationship with high-quality customers provides revenue visibility and business certainty. OII is well-positioned to supply equipment for deep-water projects.
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