BP PLC (GB:BP) announced that it plans to exit its onshore wind business in the U.S., valued at approximately $2 billion. This sale is part of the company’s strategy to streamline its renewables portfolio and offload underperforming assets. In a separate announcement, BP sealed a natural gas pipeline deal with the U.S.-based investment firm Apollo Global Management. BP shares gained 0.58% in yesterday’s trading session.
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BP is a multinational energy company involved in the exploration, production, and distribution of oil and natural gas.
BP Lists $2B U.S. Wind Business for Sale
BP announced that it will soon commence the sale of its wind assets business, BP Wind Energy, which includes interests in 10 operational onshore wind farms across seven U.S. states. The company further stated that it will divest nine wholly-owned wind farms and its stake in a tenth one in Hawaii.
With this deal, the company aims to focus on Lightsource BP, its solar energy subsidiary. In December 2023, the company agreed to acquire full ownership of Lightsource BP, with the transaction expected to be completed this year. BP believes that its wind energy assets are not in sync with its growth strategy for Lightsource BP.
BP Seals $1B Deal with Apollo on Gas Pipeline
Meanwhile, Apollo will acquire a non-controlling stake in BP’s subsidiary BP Pipelines TAP, which owns 20% of Trans Adriatic Pipeline AG, for $1 billion. It is an important pipeline that is responsible for catering to European energy demand.
Upon completion of the deal, BP will retain its position as the controlling shareholder of BP Pipelines TAP. Under this partnership, BP and Apollo will explore investment opportunities in gas, low-carbon energy assets, and infrastructure projects.
BP Faces Investor Concerns
The separate deals highlight the challenges that BP is facing in attracting investors. BP, which earns most of its money from fossil fuels, is struggling with falling oil prices and low demand. However, the Wind Energy deal marks a sudden shift in the company’s renewable energy strategy.
Analyst Biraj Borkhataria from RBC Capital commented that BP is shifting its focus by moving capital from transition projects back to its core business. Borkhataria has a Hold rating on BP stock, with a projected upside potential of 35.5%.
Is BP a Good Share to Buy?
According to TipRanks, BP stock has received a Moderate Buy consensus rating based on eight Buys, five Holds, and one Sell recommendation from analysts. The BP share price forecast is 567.69p, which implies about 40% upside potential at the current trading level.
