BP mulls deals to expand oil and gas production amid profit boom

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BP plc may pursue acquisitions to expand its oil and gas portfolio as the company scales back promises to sharply cut fossil fuel output this decade amid soaring prices and limited supplies.

“You may see us doing some smart M&A, commercial deals, partnerships, things that make sense in that space,” Chief Executive Officer Bernard Looney said in a presentation. 

The comments stand in contrast to BP’s closest peer, Shell plc, which last week ruled out using its growing cash pile to do big deals. 

As BP posted a record 2022 profit on Tuesday, it vowed to increase spending both on its traditional oil and gas business as well as low-carbon alternatives. It may do deals that would be a natural fit with BP’s existing asset base as it tries to swiftly boost output to take advantage of high prices following Russia’s invasion of Ukraine.

“Am I gonna come and ask for money to buy?” Gordon Birrell, BP’s executive vice president for productions and operations said in the presentation. “The answer is a qualified yes.”

BP’s strategy involves investing to increase oil and gas production as quickly as possible. That may mean adding drilling capacity in the Gulf of Mexico, the North Sea and the Permian shale formation in the US. But acquisitions could also help deliver that agenda.

“Where there’s a natural bolt on and we could add more value having it in our portfolio than we think anyone else could, and it meets the criteria of contributing to low-carbon and low-cost and security of supply, then of course we would consider that,” said Birrell.

© 2023 Bloomberg L.P.

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