BP Breakup Worth $100 Billion to JPMorgan on Strategy Doubts

[dipsydoodle]

Source: Bloomberg

Robert Dudley could unlock $100 billion for BP Plc investors by following ConocoPhillips and splitting up Europe’s second-biggest oil producer.

BP, trying to recover from last year’s Gulf of Mexico disaster, has lagged behind its three larger rivals this year, rising 1 percent in London even as oil peaked at $127 a barrel. Conoco’s decision to split its refinery arm from its exploration and production business led analysts at banks including UBS AG, Bank of America and JPMorgan Cazenove to recommend BP look at a similar move.

Chief Executive Officer Dudley’s efforts to revive BP have been undermined by a failed exploration deal with Russia’s OAO Rosneft and the prospect of billions of dollars of fines from the spill. JPMorgan Cazenove said BP’s assets are worth about about 800 pence a share, equal to a total market value of about $248 billion. The company currently trades at about $147 billion.

“On a sum of the parts basis, BP is ludicrously undervalued,” said JO Hambro Capital Management Group Ltd.’s Clive Beagles, who helps manage 3.8 billion pounds ($6.2 billion) of securities including more than 100 million pounds of BP shares. “Perhaps that means they need to take as radical a route as ConocoPhillips, or articulate a better strategy.”

Read more: http://www.bloomberg.com/news/2011-07-24/bp-breakup-worth-100-billion-to-jpmorgan.html

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JP Morgan own c. 28% of BP.

[benld74]

1. Ludicrously undervalued - Definition,,,,,

Adv . 1 . ludicrously - so as to arouse or deserve laughter;
"Our holdings in this company are laughably small, but once it splits into two, we will manage to become preposterously more wealthy"

[naaman fletcher]

2. This is just part of a ten year cycle.

The investment banks need fees. So, they say every oil company needs to be integrated. So they get fees as that happens. Then ten years later they say "no, wait, these companies should split up". In another ten years they will be saying that they should all be integrated again.