BP offloads US onshore wind business as it pivots back to oil
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BP has struck a deal to offload its US onshore wind business to LS Power, as the FTSE 100 energy major pushes ahead with its pivot back towards fossil fuels in a bid to revive its share price.
The terms of the deal, announced on Friday, were not disclosed but previous estimates put the value of BP Wind Energy North America at $2bn.
The wind farms, spread across seven states, are all operational and have a combined capacity of 1.7GW, of which BP owns 1.3GW.
After completion of the deal, which is expected before the end of the year, BP Wind Energy will form part of LS Power’s subsidiary Clearlight Energy, increasing the North American energy group’s operating fleet to about 4.3GW.
The move comes as BP seeks to streamline its business and refocus on its core oil and gas operation. The group announced in February that it would launch a $20bn divestment programme to “simplify and focus the business”.
William Lin, the company’s executive vice-president for gas and low-carbon energy, said on Friday that green energy still “has a role to play” in its portfolio, adding: “The onshore US wind business has great assets and fantastic people, but we have concluded we are no longer the best owners to take it forward.”
The UK oil major put the wind energy business up for sale last September. At the time, Lin said the onshore wind business was “not aligned” with BP’s plans for growth in Lightsource bp, its solar energy business.
BP is also exploring a sale of its lubricants arm Castrol, which has drawn interest from private equity and industry bidders and could be valued at $8bn, though some parties are considering making lower bids, the Financial Times reported in June.
Over the past 12 months, BP’s share price has fallen nearly 10 per cent, sparking speculation that it could be ripe for a takeover. Activist investor Elliott Management has built a stake and been pressuring the board to shake up the business.
Last month, rival Shell was forced to deny rumours that it was planning a bid for BP, saying it had “no intention” of making an offer for the company.
This month, BP warned that lower oil and gas prices were likely to hit second-quarter earnings, despite it increasing production. The company said it expected earnings in its oil business to be $600mn-$800mn lower in the three months to the end of June than the previous quarter, while gas would be between $100mn and $300mn lower.