BP Dismisses Talk Of Share Offering


LONDON—BP PLC doused speculation Tuesday that it was looking for a white-knight investor to take a large stake in the company, saying it won’t issue new equity to raise money to cover the costs of the Gulf of Mexico oil-well disaster.

Confirmation that BP isn’t planning an offering that would dilute the value of existing shares gave the stock a boost.

Its shares closed up 12 pence, or 3.7%, at 346 pence ($5.25) on the London Stock Exchange and were up 8.7% to $31.91 in 4 p.m. composite trading on the New York Stock Exchange. The U.K. oil giant’s stock has lost almost half its value since the Deepwater Horizon explosion on April 20 that triggered the oil spill.

A BP spokeswoman said Tuesday that the company would welcome any existing shareholders or new investors who want to buy already-listed shares, but no new shares will be offered.

Meanwhile, BP Chief Executive Tony Hayward visited oil-rich Azerbaijan, reiterating his company’s commitment to its projects there, including the massive Caspian Sea gas field Shah Deniz. BP has a 25.5% stake in Shah Deniz, the largest natural-gas field in Azerbaijan.

Mr. Hayward said Shah Deniz represents one of the most important projects in BP and, as operator, the company is looking forward to progressing it at pace.

Mr. Hayward’s visit follows meetings in Moscow last week to assure officials there that the company is committed to its investments in Russia.

Last month, Russian natural-gas monopoly OAO Gazprom said it was interested in buying the U.K. company’s stake in Shah Deniz if it were offered for sale.

Reports over the weekend suggested BP was courting sovereign wealth funds in the Middle East, which could buy new shares to raise an extra £6 billion, or about $9 billion, in capital. Libya’s top oil official, Shokri Ghanem, said Monday that BP is a bargain and recommended the nation’s sovereign wealth fund invest in the oil giant.

However, a member of Kuwait’s top oil-policy committee moved Tuesday to distance the Gulf country from increasing its stake in BP as speculation continues that Middle East investors are preparing to rescue the company.

“The investment authority in Kuwait already has a stake in BP and have lost a considerable amount on the book value,” said Imad Al Atiqi , a member of Kuwait’s influential Supreme Petroleum Council.

BP potentially faces tens of billions of dollars of liabilities relating to the spill from its Macondo well, which has fouled beaches and damaged fishing and tourism industries.

The company has already spent $3.12 billion on the cleanup, containment and compensation—and has promised to pay another $20 billion into an independently administered fund to cover future liabilities over the next 3½ years.

But BP won’t sell any new shares—including shares bought back from investors and now held by the company, a spokesman said.

BP on June 30 said 1.86 billion ordinary shares had been bought back and are held in treasury, and 112.8 million ordinary shares had been bought back for cancellation—all together just more than 10% of all shares.

“These shares held in the treasury are treated the same as new shares,” the spokesman said.

BP has also built up a substantial war chest to handle the spill costs. It had a prior $5.25 billion credit line available with a number of banks and, in a show of support since the oil spill, eight or nine banks have offered additional standby credit lines totaling $9 billion, according to a person familiar with the matter.

BP also had $5 billion in cash on its balance sheet in early June, will save $7.8 billion through the cancellation of three quarterly dividends and will trim $2 billion from its capital expenditure this year.

Also Tuesday, U.K. Prime Minister David Cameron’s spokesman declined to comment on a report that government departments were preparing a contingency plan in case of BP’s collapse.

Asked about a report in the Times, suggesting the Treasury and the Business department were drawing up contingency plans, the spokesman said; “If they are happening, we would never comment on them.” He also declined to comment on whether the government would have any concerns if a sovereign wealth fund were looking to take a stake in the company.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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