BP is also BO (Big Oil). It is the world's third-largest integrated oil concern, behind Exxon Mobil and Royal Dutch Shell. BP explores for oil and gas in 30 countries and has proved reserves of 18.1 billion barrels of oil equivalent. BP is the largest oil and gas producer in the US and also a top refiner, with stakes in 16 refineries, processing 4 million barrels of crude oil per day. BP markets its products in more than 80 countries and operates 22,400 gas stations worldwide. The company's reputation took a major hit in 2010 when one of its deepwater rigs, working less than 50 miles south of Louisiana, exploded and killed 11 workers. Millions of gallons of crude gushed into the Gulf of Mexico for months.
The spill developed into a major political, economic, and public relations crisis for the company as it struggled to cap the leaking well, clean up the massive oil spill, and mollify Gulf Coast communities, which saw their fishing industry decimated and their coastlines inundated by oil. To address the growing crisis, in June 2010 the company agreed to establish an escrow account of $20 billion, managed by a third party, to reimburse claims from people and businesses financially damaged by the oil spill. (It settled with individual and business plaintiffs for $7.8 billion in 2012, but still faced federal, state and local government charges).
As the crisis continued BP began looking to sell shares to significant institutional investors and major oilfield assets to other oil companies in order to generate cash. In July BP sold assets in Canada, Egypt, and the Permian Basin in the US to fellow explorer Apache for about $7 billion. The deal included BP receiving a $5 billion cash advance. In 2011 it sold its Colombian assets to Talisman Energy and Ecopetrol for $1.9 billion and properties in Venezuela and Vietnam to its Russian joint venture TNK-BP for $1.8 billion. The company tried to sell its 60% stake in South American exploration and production company Pan American Energy to Argentina's Bridas for about $7.1 billion but the deal fell through. All told, BP sold about $19 billion of assets with plans to unload a total of $45 billion worth by the close of 2013.
Tony Hayward stepped down as CEO in October, 2010, and was replaced by BP veteran Robert Dudley (the first American CEO in BP's history) who was seen a better fit for working with the local and federal authorities in the aftermath of the Gulf of Mexico spill situation.
Prior to the Deepwater Horizon rig disaster, BP announced a medium-term exploration and development strategy focused on growing its operations in three areas: deep water production, global natural gas production (including development of unconventional gas fields, such as shale plays), and managing a number of the world's major oilfields where it has established a leadership position over the past 20 years. BP plans to lift its daily production through 42 new exploration and production projects between 2010 and 2025. The 1-billion-barrels-per-day increase from these projects is planned to more than offset the decline in production from BP's aging fields.
Boosting its North Sea assets, in 2010 the company agreed to buy two oil fields in the Norwegian sector from TOTAL for $991 million. That year BP acquired Devon Energy's international assets for $7 billion in a deal that, among other things, gave BP a foothold in the emerging major oil play off the coast of Brazil. The company also gained properties in Azerbaijan and the Gulf of Mexico. (In 2010 it agreed to sell four of these mature deepwater oil and gas fields in Gulf of Mexico to Marubeni Oil and Gas for $650 million in order to pay down debt).
On the renewables side of the business, since 2006 BP has invested $4 billion (including $1.3 billion in 2009) to develop wind, solar, and other green energy sources. In its biggest alternative energy purchase to date, in 2011 BP acquired 83% of Brazilian ethanol and sugar producer for around $680 million. Later that year it spent about $71 million for the half of Brazilian biofuel joint venture Tropical BioEnergia that it didn't already own. The JV participants were Maeda SA Agroindustrial and LDC-SEV Bioenergia SA.
The global recession and the slump in demand for oil and gas products saw BP's revenues (along with those of its industry peers) plummet in 2009. Improved market conditions in 2010 lifted revenues. However, the company reported a $4.9 billion loss for 2010 as a result of the Gulf oil spill and its aftermath, the cost of which was pegged at almost $41 billion.
Having absorbed the economic blows, in 2011, with oil prices surging, the company looked towards expansion opportunities. It agreed to form a strategic alliance with Russian oil giant Rosneft to develop three blocks on the Russian Arctic continental shelf. The deal, which involves a stock swap of 5% of BP's shares for 9.5% of Rosneft's, gives BP access to a new development area with a production capacity on a par with the UK North Sea. However, rival Russian partners at BP's established Russian joint venture TNK-BP objected to the deal, on the grounds that they should have first choice on BP expansion activities in Russia. A London arbitration tribunal in March found in the Russian partners' favor. BP then agreed to pursue the Rosneft deal through TNK BP. This move was unsuccessful and in May 2011 the BP/Rosneft deal fell through.
BP also reached out to establish a joint venture in India in 2011, buying 30% of 23 oil and gas blocks from Reliance Industries for about $7.2 billion. To raise cash, in 2011 BP agreed to sell its NGL operations in Canada to a Plains All American Pipeline unit for $1.7 billion. It also agreed in 2012 to sell its Hugoton, Kansas, Jayhawk gas processing plant and related gas fields to a Linn Energy unit for $1.2 billion.