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BP's Majority Ownership in Finite Carbon: Digging into Details

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Zacks Equity Research
·3 min read
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BP plc BP announced the acquisition of controlling stakes in Finite Carbon, the largest forest carbon offsets producer in the United States. In late 2019, the British energy giant had made a venture investment of $5 million in the forestry firm which is based in Pennsylvania.

The financial terms of the latest deal have not been disclosed by either of the companies. Notably, the integrated energy player added that the North American leading forest carbon offsets developer will be a part of BP Launchpad.

Investors should know that with 50 carbon projects spreading over three million acres in the United States, Finite Carbon provided incentives to the landowners for not cutting down trees and generated more than $500 million in revenues for the clients. Remarkably, to operate in California, greenhouse gas emitters purchase these offsets. Per California Air Resources Board data, out of all the forest offsets that have been issued by the state since 2013 when cap-and-trade started, Finite Carbon has been responsible in generating 45% of them.

Thus, with the latest deal, BP has further strengthened its presence by aligning its operations with climate goals and has also created a new revenue stream. In fact, when the coronavirus pandemic has dented global fuel demand and hurt BP’s revenues from oil and gas activities, most of the analysts opine that the expected rise in carbon-offset credit price, amid the energy transitioning, will help to nullify the oil-energy business downturn.

Overall, the deal reflects the British energy major’s strong focus on low-carbon investments. BP is planning to become a net-zero emission company by 2050.

BP p.l.c. Price

BP p.l.c. Price
BP p.l.c. Price

BP p.l.c. price | BP p.l.c. Quote

Currently BP carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked players in the energy space include Summit Midstream Partners, LP SMLP, DCP Midstream, LP DCP and HighPoint Resources Corporation HPR. While Summit Midstream carries a Zacks Rank #2 (Buy), DCP Midstream and HighPoint sport aZacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Summit Midstream has seen upward earnings estimate revisions for 2020 in the past seven days.

DCP Midstream has seen upward estimate revisions for 2020 earnings in the past 30 days.

HighPoint is likely to see earnings growth of 167.5% in 2020.

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BP p.l.c. (BP) : Free Stock Analysis Report
 
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