US regulators may force BP to miss deadline for Arco deal
Tuesday 09 November 1999
BP, which secured a provisional agreement with the Alaskan government late on Friday regarding asset disposals, said the US Federal Trade Commission was pre-occupied with the Exxon-Mobil merger, slowing down other deals. "We're conscious we are very much the second cab off the rank," the company said.
Under the terms of the agreement struck on Friday, BP Amoco will sell a quarter of Arco's Alaskan assets and a 13 per cent stake in the Trans Alaskan Pipeline. Sir John Brown, chief executive, said there was strong interest from at least six potential buyers.
Sir John was speaking as BP Amoco unveiled a 72 per cent rise in third- quarter pre-exceptional profits to just under $2bn (pounds 1.23bn). The rise was fuelled by higher crude prices, which added $200m to profits. BP said it expects the crude price to be slightly ahead next year on its 1999 average of $14.7 a barrel. "Oil stocks are down, demand is up and compliance with Opec quotas is good," Sir John said.
He added that the original $2bn of cost savings targeted when BP acquired Amocohad been achieved, more than a year ahead of schedule. However, he said the downstream business faces tough conditions, with pressure on pump prices.
The company expects to sell about $2.5bn of assets this year of its total target of $10bn. Capital expenditure will be about $9.5bn in each of the next two years. Gearing is expected to slip below the 25 per cent threshold the company has set itself. BP will therefore seek approval for the repurchase of 5 to 10 per cent of its share capital.
Sir John said the rising oil price was just one factor behind the profit surge. Performance improvements contributed $400m to earnings, he said. The shares rose 25p to 566p.
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