BP reports £6.9bn profit for Q2 after oil and gas prices soar

BP has reported its highest quarterly profit for 14 years, prompting calls for a tougher windfall tax on exceptional profits in the oil and gas sector.

The UK-based oil and gas giant said that its underlying replacement cost profit for the second quarter of 2022 was £6.9bn. This was more than triple the amount it made in the same period last year, and the strongest since 2008.

BP also said that it was increasing its dividend by 10% to 6.006 cents per share.

It comes days after huge profits were reported by rival Shell and British Gas owner Centrica, as well as US oil companies ExxonMobil and Chevron.

Oil and gas prices have soared after Russia invaded Ukraine and threatened to cut off gas supplies to Europe.

Typical household energy bills in the UK are forecast to hit more than £3,600 a year this winter.

Speaking to the BBC’s Today programme, Dale Vince, founder of energy supplier Ecotricity, said that BP was “holding a shedload of money that is coming from hard-pressed bill-payers in our country”, adding he believed it was time to increase taxation on the profits of oil and gas companies.

“Clearly there are exceptional windfall profits in the oil and gas sector, and clearly there’s a problem in the energy market, and we should fix one with the other.”

Doug Parr, chief scientist for Greenpeace UK, also called for a “proper windfall tax” on the huge profits made by oil and gas firms.

“This could unlock billions of pounds to alleviate household bills and fund a nationwide roll-out of home insulation which would keep bills low for good and get our UK fossil gas use under control,” he said.

Technip acquires Norwegian Ingenium

French oil services group Technip SA (EPA:TEC) said today it had agreed to buy Norwegian offshore engineering and services contractor Ingenium AS, without specifying how much it had paid for it.

The target, which is based in Oslo, designs and develops mechanical and electro-hydraulic tools and equipment for the offshore oil and gas industry, as well as provides engineering services for marine operations. It employs 20 engineers in the subsea business.

Through the acquisition, the company adds complementary engineering capabilities and enhances its position in one of its key markets, Technip’s managing director Odd Stromsnes said. The buyer added that it had previously worked on different projects with the Norwegian firm.

Shell’s $400 million Niger Delta security funds better invested on local communities — report

Oil giant Shell has spent almost $400m in three years guarding its installations in the Niger Delta, including maintaining its own 1,200-strong internal ‘police’ force, running a network of plainclothes informants and supplying government forces with equipment, according to Platform, a campaign group.

Platform combed through leaked internal documents and WikiLeaks diplomatic cables to unpick Shell’s $1bn security spend between 2007 and 2009 – of which almost 40% was spent protecting its Nigerian facilities. The group also looked at Shell’s close relationship with government forces dating back to 2003. The Observer reported on the organisation’s findings yesterday.

Shell’s colossal Niger Delta facility has come under frequent attack from armed insurgents, who are frustrated by the local population’s exclusion from the Delta’s incredible oil wealth and by pollution. Kidnappings of oil workers, robberies and attacks on pipelines were frequent during the period covered by the documents.

Shell’s facilities in the Niger Delta are protected from armed insurgents by 600 police and 700 members of the Joint Task Force (JTF), which combines army, navy and air force. Platform claims in 2008 Shell spent almost a third of its global security budget – $99m – on ‘third parties’, which is believed to include supporting such Nigerian government forces such as the JTF.

‘Shell has supplied these government forces with gunboats, helicopters, vehicles, food, accommodation, satellite phones, stipends and large-scale funding throughout years of conflict in the Delta region,’ Platform notes.

Related article: Embassy cables reveal Western complicity in Nigerian oil conflicts

Platform is concerned that JTF has a poor record on human rights violations. In 2009 alone, Platform estimates Shell provided $65m to the Nigerian government. ‘This is a staggering transfer of company funds and resources into the hands of soldiers and police known for routine human rights abuses,’ the campaign group notes. The same year, the Nigerian military used helicopter gunships to launch an campaign lasting several weeks against the camp of a militant leader named Government Tompolo in the Delta.

The US State Department said the attacks displaced ‘tens of thousands’ and cost them their livelihoods, as well as killing an unknown number of people.

Platform suggests that at the time of these attacks Shell was providing extensive financial support to the JTF. ‘Instead of holding government forces to account by ensuring that abuses were properly investigated and appropriate punishment or disciplinary action taken, Shell rewarded the JTF with lucrative funding and support,’ Platform notes.

In many cases, Shell’s security spending may only serve to entrench the conflict. The security spending documents show Shell spent $75m on a mysterious category marked ‘Other’. WikiLeaks cables reveal that in 2003 Shell was among oil companies making payments of up to $300 a month, and Shell ‘frequently’ pays off armed groups, for example to regain access to closed-off facilities.

But this can encourage groups to battle for control of particular towns or facilities: in one case documented by Platform, the town of Rumuekpe was completely destroyed by rival armed groups struggling for access to alleged payments from Shell, with an estimated 60 people killed.

Meanwhile, of the $35m spent on private security contractors in 2008, Platform claims that local contracts often turn out to be with the very militants they are targeting. And the hardline approach of external contractors, many of whom have shipped in as contracts dry up in Iraq and Afghanistan, only fans the flames of conflict. Private contractors often give orders to military personnel guarding oil facilities, muddying the line between corporate and government responsibility for incidents, Platform adds.

‘What is striking about Shell’s security spending in Nigeria is its ineffectiveness,’ the report notes. Investing in communities and cleaning up ‘decades’ of pollution, the report suggests, could yield very different results.

This version of the story was first published by The Bureau of Investigative Journalism.

Abraxas, Blue Stone Oil & Gas to break-up Blue Eagle JV

Texas-based oil and natural gas exploration and production company Abraxas Petroleum Corp (NASDAQ:AXAS) said it had signed a letter of intent (LoI) to break-up its Blue Eagle Energy LLC joint venture with Blue Stone Oil & Gas LLC after the partners failed to dispose of the entity earlier this year.

Blue Eagle Energy was formed in 2010 to develop the Eagle Ford Shale play in South Texas. Abraxas explained that the sale of the JV had turned unsuccessful as the price of oil fell during negotiations and the at-first-acceptable bids were reduced too much.

Abraxas holds some 34.7% interest Blue Eagle Energy. Now the partners will separate the assets, so Abraxas will include its portion in its bank borrowing base, resulting in increased liquidity. The company will also cut the confusion coming out of joint venture accounting and be able to count in its operating metrics production, reserves and cash flow, it said.

Under the terms of the LoI, Abraxas will retain a 100% stake in the Eagleford and shallower rights in Jourdanton, Atascosa County; 100% in Yoakum, DeWitt County; 25% in WyCross, McMullen County; and a 25% interest in the Nordheim, DeWitt County assets. The company calculates that the producing wells it will take have a capacity of 205 barrels of oil equivalent per day. The proven reserves to go to Abraxas are estimated at around 2.4m barrels of oil equivalent, while the probable reserves are 3.7m barrels of oil equivalent. The company will also get $7m (€5.7) in cash plus its share of the joint venture’s working capital.

Furthermore, Abraxas said it had wrapped up a $7.2m deal to take a partner’s share in jointly owned properties in Ward County, West Texas. The transaction amount excludes closing adjustments. That acquisition expands the company’s portfolio by 240 barrels of oil equivalent production per day and some 1.2 million barrels of oil equivalent of proved developed producing reserves. Natural gas accounts for 95% of the acquired assets.

Shell names new deadline for Cove Energy bid

Royal Dutch Shell Plc (LON:RDSA) announced on Thursday a new extension until 25 July for its £2.20 ($3.41/€2.80) a share takeover offer for Cove Energy Plc (LON:COV), after securing 3.27% in the British oil and gas explorer by the previous deadline on 11 July.

Of the total acceptances, irrevocable commitments cover only 0.95% of the target’s capital, the buyer said.

The offer, valuing Cove at around £1.12bn in total, was agreed in April and outmatched by Thai oil and gas explorer PTT Exploration and Production Pcl (PINK:PEXNY), or PTTEP, which proposed in late May to buy Cove at £2.40 per share.

At the time, Shell said that in the light of the higher rival offer it was looking into options regarding its own bid. Its offer, launched on 2 May, was first extended to 13 June and further until 28 June and 11 July.

Shell wants to buy Cove to strengthen and diversify its global liquefied natural gas (LNG) portfolio of production and development projects, it has said. Cove’s board agreed to back the deal in April, but later withdrew its support and accepted the £1.22bn transaction with PTTEP, whose offer is also running with a new deadline set for 13 July. PTTEP said its bid won 0.25% acceptance by 6 July.

Both bids are subject to winning an acceptance level of at least 90%.

In an earlier comment, Cove’s CEO John Craven said that the offer from the Thai group represented substantial value for shareholders, while recognising the world-class nature of Cove’s assets in East Africa.

Forestar’s target Credo Petroleum gets no offers

US oil and gas explorer Credo Petroleum Corp (NASDAQ:CRED) announced on Tuesday it had received no alternative takeover approaches during the go-shop period agreed with its suitor Forestar Group Inc (NYSE:FOR) in June.

The agreement announced on 4 June for $14.50 (€11.60) a share, or some $146m in total, allowed Credo to seek alternative proposals during a 30-day period which ended on 3 July, the target firm said.

At the signing of the agreement, Credo’s chairman James T. Huffman said that the deal, backed by both companies’ boards, reflected the value built into Credo since it started its transition four years ago from natural gas to oil. Forestar’s size and substantial oil and gas portfolio would help step up that transition, while the tie-up would create synergies from the combined human and technical resources, Huffman added.

For Forestar, the acquisition of Credo would more than double its existing oil and gas production and proven reserves, give it operating flexibility and establish a strong platform for future growth, the group’s president and CEO Jim DeCosmo has said. It also serves Forestar’s Triple in FOR strategy to accelerate value realisation and boost net asset value through investments, he added.

Credo expects now to wrap up the deal in the second half of this year, pending a number of conditions, including clearance from its shareholders.

The transaction does not need the approval of Forestar stockholders and it is not subject to financing conditions.

The target company has substantial assets in regions including North Dakota Bakken and Three Forks, Kansas, Nebraska, the Texas Panhandle and Oklahoma.

National Oilwell Varco agrees buy CE Franklin for $240m

National Oilwell Varco Inc. (NYSE:NOV), an American oilfield equipment and services provider, will acquire CE Franklin Ltd (TSE:CFT), a Canadian oil & gas equipment distributor, for CAD12.75 a share, or CAD240m in total, CE Franklin confirmed.

The buyer will add CE Franklin to its Canadian distribution business, widening its product offering and customer base in the growing Canadian market, chairman and president, Pete Miller, said.

CE Franklin’s president and CEO, Michael West, said in his comment that apart from providing significant value to shareholders, the deal ensures for his company the chance to become part of a global sector leader and boost client service, while increasing opportunities for employees.

The offered price, a premium of 36% to CE Franklin’s closing on 30 May, was considered fair by the target’s board and its financial advisor CIBC World Markets Inc, which recommended shareholders to accept it.

Schlumberger Ltd (NYSE:SLB), CE Franklin’s largest shareholder, together with the company’s directors and executive officers pledged to vote their combined 57% of the company shares in favour of the transaction.

The US buyer needs to secure at least 66% of the votes at a special meeting of CE Franklin shareholders to be held in mid-July, as well as regulatory approvals.

Completion is seen to occur shortly after the shareholders meeting.

CE Franklin, through 39 branches in western Canada, distributes pipe, valves, flanges, fittings, production equipment, tubular products and other general oilfield supplies to local oil and gas producers, as well as to the oil sands, refining, heavy oil, petrochemical, forestry and mining sectors.

Shell considers options after PTT trumps its bid for Cove Energy

Royal Dutch Shell plc (LON:RDSA), pursuing Cove Energy Plc (LON:COV), said on Thursday it was looking into options after Thai oil and gas explorer PTT Exploration and Production Pcl (PINK:PEXNY), or PTTEP, had made a higher, rival offer of GBP2.40 (USD3.80/EUR2.99) a share for the British oil and gas explorer.

Shell, which is currently carrying out a GBP2.20 a share takeover offer for Cove, said it would announce its decision when appropriate.

In the meantime, Shell extended its own offer until 13 June, saying it had secured acceptance for 4.83% in Cove by the bid’s first closing date on 23 May.

The Dutch oil group agreed on 24 April to take over Cove in a deal worth some GBP1.12bn, hoping to strengthen and diversify its global liquefied natural gas (LNG) portfolio of production and development projects.

Cove’s board agreed to back the deal at the time, but it withdrew its support on Wednesday when PTTEP proposed a higher price of GBP1.22bn, saying it was now recommending shareholders to accept PTTEP’s offer.

In his comment, Cove’s CEO, John Craven, said this latest offer represented substantial value for shareholders while recognising the world-class nature of Cove’s assets in East Africa.
For the Thai buyer, the deal allows it to leverage its LNG value chain, in line with the group’s long-term strategic priorities, CEO, Tevin Vongvanich said.

Both offers are subject to winning an acceptance level of at least 90%.

EC gives oil majors the green light to take joint control of Angola LNG

The European Commission said on Wednesday it had given its consent to the deal by oil and gas companies BP plc (LON:BP) in the UK, Chevron (NYSE:CVX) in the US, Italian Eni SpA (BIT:ENI), French Total SA (EPA:TOT) and Angolan Sonangol to take joint control of liquefied natural gas producer and supplier Angola LNG Ltd.

The regulator said it had found no competition concerns regarding the deal as the joint venture is anticipated to have a moderate market share, leaving room for a number of credible competitors in the market of interest for the EC whose ability to access re-gasification terminals will not be changed.

The JV would transform natural gas into LNG which it would then sell to clients around the world for re-gasification.

It would use natural gas obtained as a by-product from oil production and transported along pipelines to its liquefaction plant in Angola.

Although Total, Eni and BP hold capacity rights in re-gasification terminals in the European Economic Area, third party access to these terminals is ensured under the European Union (EU) law, the EC said, adding that the JV deal would not result in any changes in the competitors’ ability to access gas import infrastructures.

Based on all these findings, the EC concluded that competition in Europe will not be affected by the transaction, it said.

According to a memorandum of understanding (MoU) signed in 2007, Chevron would have 36.4% in the JV, Sonangol would hold 22.8%, Eni 13.6%, Total 13.6%, and BP 13.6%.