British Petroleum has made much in recent years with advertising that “BP” stands for “Beyond Petroleum”. The latest news from this fossil-fuel giant indicates that “Beyond Petroleum” is becoming a question: “Beyond Petroleum to what?”
Todd Hayward, BP’s Chief Executive Officer, has put the Corportion’s green businesses on the auction block. The price tag he’d be willing to sell BP’s solar and wind energy businesses: reported $5-7 billion. This isn’t a trifling amount but with the ravenous appetite in the investing community for “green” opportunities, it is far from a roadblock number (dependent, of course, on the real value of the assets).
Hayward, it seems, is looking to manage the company’s profitability in the near term rather than create the opportunity space for even greater profitability tomorrow.
“We intend to grow this business predominantly for its equity value,’ said Hayward. ‘Taking stock-market valuations for similar companies, we estimate it is already worth between $5bn and $7bn. As we go forward we will be looking at how best we can realise that growing value for shareholders.’
Yes, this looks like a comment about managing profits for the quarter rather than the future. But, was it?
Interestingly, “Mr Hayward rejected suggestions that BP was lessening its commitment to renewable energy.” Yet, he said “everything was on the table”. Note that BP’s shares have suffered this year, even as other oil companies have had bonanzas. Thus, is this a real move or a strategic ploy? At least one analyst suggesting that Hayward was planning the investment community, trying to up the valuation of the renewable energy business in the BP portfolio. Mr Hayward may be “just flagging up the potential of Alternative Energy to get us to focus on it.”
If this isn’t just a ploy to play the investment community, but a real start to putting the division up for sale, the question before Hayward:
Beyond Petroleum … to What?