UPDATE: BP Shares Surge As Market Digests M&A Prospects

30th Jun 2010 12:33

(Adds detail, TNK-BP comment.) By James Herron Of DOW JONES NEWSWIRES LONDON (Dow Jones)--BP PLC (BP) shares rose more than 9% Wednesday morning as the market reappraised the embattled company's value as a takeover target once the crisis in the Gulf of Mexico subsides, equities traders said Wednesday. "The JPMorgan note yesterday highlights the value case--not just for Exxon but by extension, for investors buying the shares down here," said one trader who did not wish to be named. JPMorgan analyst Fred Lucas said Tuesday that BP could be worth 473 pence a share to a potential buyer, such as U.S. oil giant Exxon Mobil Corp. (XOM)--a hefty premium to BP's current share price. "The market has lost sight of the intrinsic value that is resident in an asset-rich company like BP," Lucas said. At 1112 GMT BP was trading at 324 pence, up 21 pence, or 7.0% from Tuesday's close. Reports casting doubt on the ability of Anadarko Petroleum Corp. (APC), to avoid paying its quarter share of the total oil spill liability are also a positive catalyst for BP shares, the trader said. The Financial Times reported Wednesday that Anadarko received regular updates from BP about the drilling operation aboard the Deepwater Horizon and approved many aspects of BP's design for the leaking Macondo well. Anadarko Chairman and Chief Executive Jim Hackett said earlier this month that, "BP's behavior and actions likely represent gross negligence or willful misconduct," which if proven could mean its partners in the well are not liable for their share of the soaring oil spill costs. Separately, the deputy chief executive of BP's Russian joint venture, TNK-BP Ltd. (TNBP.RS), said his company could be interested in acquiring assets from BP outside Russia. BP plans to sell off $10 billion of non-core exploration and production assets this year to provide a cushion against future liabilities from the Gulf of Mexico spill. Several investment banks have teams reviewing BP's asset portfolio to find the most suitable assets to sell. BP has sizeable assets in Colombia, Algeria, Australia, and South America, none of which are seen as central to the company's future strategy. BP also has minority stakes in numerous oil fields operated by other companies all over the world. -By James Herron, Dow Jones Newswires; +44 (0)20 7842 9317; [email protected] (Andrea Tryphonides and Michele Maatouk in London, and Jacob Gronholt-Pedersen in Moscow contributed to this article.) (END) Dow Jones Newswires June 30, 2010 07:33 ET (11:33 GMT)