Oil and gas giant BP Plc (ADR) (NYSE: BP) on Friday said that it is seeking to sell its stake in Russian joint venture, TNK-BP. The oil major said that it informed its joint venture partner that it is considering a potential sale of its 50% stake in TNK-BP.
The sale would allow BP to free itself from governance battles at TNK-BP. However, the U.K.-based company will also lose significant earnings if it exits the joint venture.
The announcement about the potential sale came after the resignation of Russian billionaire Mikhail Fridman as CEO of TNK-BP. The sudden resignation of Fridman was yet another sign of increasing tensions between BP and the shareholders of its Russian partner Alfa Access Renova.
In a statement, BP said that in light of these unsolicited approaches and consistent with BP’s commitment to maximizing shareholder value, and its obligations under the shareholder agreement, the company has notified Alfa Access Renova of its intention to pursue a potential sale. The company, however, noted that there is no guarantee that any transaction will take place. BP added that a further announcement will be made when and if appropriate.
In 2011, TNK-BP accounted for 27% of BP’s hydrocarbon reserves and 29% of its production, according BP’s annual report.
Even though BP stands to lose significant earnings by exiting the joint venture, investors welcomed the company’s plans. According to Sam Wahab, analyst at Seymour Pierce, it is a good opportunity to exit that part of the business that tends to cause more problems than it should.
BP shares rose sharply on Friday despite a sharp decline in the broad market. The stock ended the day 0.82% higher at $36.76 on above average volume of 11.41 million.
BP shares are down nearly 14% this year.
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