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BP’s Divestment Strategy at Play: SECCO Stake Sale

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BP plans to sell stake in SECCO

In this series, we’ll provide you with an update on BP’s operations, financials, and market performance. In the next few parts, we’ll examine BP’s latest stock performance, followed by analysts’ ratings and upstream and downstream segment analyses.

Then, we’ll analyze BP’s financial position by examining the company’s leverage and cash flow. Finally, we’ll discuss BP’s valuations, short interest position, institutional ownership status, and implied volatility movements. We’ll begin by looking at the BP’s stake sale plans.

BP (BP) plans to sell its stake in SECCO (Shanghai SECCO Petrochemical Company), the petrochemical joint venture between BP, Sinopec (China Petroleum & Chemical), and SPC (Shanghai Petrochemical Company). BP holds a 50% stake in the joint venture.

 

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BP’s divestment strategy

According to various media reports, BP plans to sell its stake in SECCO. The reports estimate the stake’s value to be around $2 billion–$3 billion. The reports also state that Sinopec has the right of first refusal for BP’s stake in SECCO. SECCO produces a variety of base and specialty chemicals required by various industries.

This stake sale is part of BP’s divestment strategy. BP plans to divest $3 billion–$5 billion worth of assets in 2016 to support its liquidity position. After 2016, BP expects to make $2 billion–$3 billion worth of asset sales per year.

The company plans to rebalance its sources and uses of cash by 2017 at an oil price level of $50–$55 per barrel. For this, BP plans to lower its operating costs, optimize its capital expenditure, and raise funds through divestments. This strategy will help it to meet the Gulf of Mexico oil spill charges and endure lower oil prices.

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