BP plc (BP) aims to exit its liquefied petroleum gas (LPG) bottle and tank filling businesses worldwide as the U.K. giant aims to concentrate more on hydrocarbon production.
The company intends to divest its LPG bottles and tank filling operations in Portugal, UK, Austria, Poland, Netherlands, Belgium, Turkey, China and South Africa, as well as its non-refinery integrated wholesale business.
The divestiture program — expected to be over by the end of 2013 — also comprises LPG storage terminals, bottle filling plants, customer lists, operating licenses and logistics assets. However, the company will continue with its autogas business in Europe and maintain wholesale outlets to support its refinery operations.
A review of BP’s LPG portfolio in 2011 revealed that it is not the natural long-term owner of the LPG bottles and tank filling business. This gave the oil giant the liberty to carry out the asset sale.
On the contrary, the company aims to concentrate more on its refining and marketing (R&M) businesses in which it holds pioneering market positions. BP’s R&M business segment posted a profit of $564 million in fourth quarter 2011, compared with $964 million in the year-ago quarter.
The quarterly result reflects the effect of the reduced refining margin environment, lower petrochemicals margin as well as foreign exchange impacts. However, these negatives were partially mitigated by the superior refining environment and stronger supply and trading contributions.
The company also revealed that it expects its next quarter refining margins to be stronger than the reported quarter. Although the planned turnaround activities in 2012 are expected to be similar to the 2011 levels, BP expects the marketing environment in fuels, lubricants as well as petrochemicals to remain subdued based on the global demand.
We have maintained our long-term Neutral stance on BP, U.K.’s second-largest oil company after Royal Dutch Shell Plc (RDS.A). The company holds a Zacks #3 Rank, which translates to a short-term Hold rating.
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