Shareholders welcomed news of oil stock BP’s (NYSE:BP) plan to sell off some of its assets to a different oil company. It wasn’t a particularly warm welcome—shares were only up fractionally in Monday afternoon’s trading—but it was a welcome nonetheless.
BP looked to sell three fields around Trinidad and Tobago to French oil company Perenco. Specifically, BP looked to sell the Cashima, the Amherstia, and the Immortelle fields. Considering that BP is the largest natural gas producer in Trinidad, this might sound counter-intuitive.
But reports suggest that the three fields in question have been in steady decline over the last few years, and aren’t producing anywhere near what they used to. Thus, selling off can give BP some ready cash to go find new properties while Perenco pulls out what’s left in the area.
Renewables to the Back Seat
The move comes at an interesting time for BP, as it’s apparently looking to ramp up production in light of new demand. Reports note that BP is seeing “…growing demand for energy right now across the globe,” and that means oil. BP looks to surge its oil production between 2% and 3% a year through 2027. While renewables won’t be out of the picture altogether, it’s clear that hydrogen, biofuels, and the like—which are still developing technologies in many cases—will be set aside to meet immediate demand with fuels that work today.
Is BP a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on BP stock based on five Buys and three Holds assigned in the past three months, as indicated by the graphic below. After a 2.9% rally in its share price over the past year, the average BP price target of $37.44 per share implies 3.95% downside risk.
