BP finally joined the carnival yesterday, spending $7bn to snap up assets in Brazil, Azerbaijan and the Gulf of Mexico. It will strengthen the oil major’s presence in all these regions, especially the Gulf of Mexico. Evo reckons that the whole of the Kaskida field – in which BP is upping its stake from 70 to 100 per cent – could be worth $6bn alone, based on 600m barrels at a net present value of $10 a barrel to BP.
But make no mistake: this deal is all about Brazil. BP has missed out on several opportunities in the South American country, which could soon rival Venezuela as the region’s biggest oil producer. It has been standing on the sidelines while Petrobras, along with partners Repsol and BG, has made huge discoveries.
As analysts at Fortis point out, this will push BP’s gearing to around 26 per cent, although this is well within its self-assigned target range of 20 to 30 per cent. Some suggest that Tony Hayward is paying over the odds, but these assets are worth it. Olá e benvindo ao Brasil – welcome to Brazil.