U.K. supermajor BP plc (BP) has entered into negotiations with Russian oil giant OAO Rosneft to gain a foothold in an Eastern Siberian oil field. The company is optimistic about the Taas-Yuriakh field which it believes as holding large petroleum reserves.
The ongoing negotiations catch prominence owing to the timing. The deal is being planned at a time when the Western sanctions are looming large over Russia over its Ukrainian misadventures. However the sanctions are restricted to ban exporting technology for tapping shale and arctic reserves to Russia. The proposed deal would likely not be subject to any such sanctions. BP already owns almost a fifth of Rosneft.
London-based BP plc is one of the world's largest energy companies, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products. It operates in three segments: Exploration and Production, Refining and Marketing, and Other Businesses and Corporate.
In the last reported third quarter, total production of 2.147 million barrels of oil equivalent per day (MMBoe/d) was down 2.7% year over year. The company sold liquids for $91.42 per barrel in the third quarter (versus $100.66 in the year-earlier quarter) and natural gas for $5.40 per thousand cubic feet (versus $5.01). Overall price realization fell to $61.61 per Boe from the year-ago level of $62.80 per Boe.
BP expects fourth-quarter production to be lower than the third quarter primarily due to weather disruptions and the closing of the Alaska assets sale. Similarly, its fuels business would be affected by a lower level of turnarounds and seasonal demand. Margins are expected to drop for both fuels and petrochemicals businesses in the ongoing quarter.
BP currently carries a Zacks Rank #5 (Strong Sell). Investors interested in the oil and gas sector could consider better-ranked stocks like Spectra Energy Partners, LP (SEP), Seadrill Partners LLC (SDLP) and Sandridge Mississippian Trust II (SDR). All these carry a Zacks Rank #1 (Strong Buy).
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