Wind Of Change: Energy Giants Equinor & BP Give Offshore Wind Power Project Deal A Second Chance
Portfolio Pulse from Lekha Gupta
Equinor ASA (EQNR) and BP PLC (BP) have restructured their offshore wind power project ownership. Equinor will take full ownership of the Empire Wind lease and projects, including BP's 50% share of the South Brooklyn Marine Terminal lease. BP will own Beacon Wind Holdings LLC and operate Beacon Wind projects. The deal is cash-neutral, except for standard settlements, and reflects both companies' strategic priorities. The transaction is expected to close in Q2 or Q3 2024, pending regulatory approval, and will result in a $200 million reported loss for Equinor. The deal will increase Equinor's capital expenditure to $1.2 billion in 2024 and $1.5 billion in 2025. Equinor's shares dropped by 0.69% to $28.65, while BP's shares rose by 0.74% to $35.41 in premarket trading.
January 26, 2024 | 12:21 pm
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POSITIVE IMPACT
BP PLC will take full ownership of Beacon Wind Holdings LLC and become the operator of Beacon Wind projects. The deal is expected to align with BP's strategic priorities. BP's shares saw a premarket increase of 0.74%.
BP's acquisition of full ownership and operational control over Beacon Wind Holdings LLC could be viewed positively as it aligns with the company's strategic priorities. The premarket increase in BP's shares suggests a positive short-term impact.
CONFIDENCE 85
IMPORTANCE 70
RELEVANCE 90
NEGATIVE IMPACT
Equinor ASA will fully own the Empire Wind lease and projects, increasing its capital expenditure significantly in the coming years. The transaction will result in a reported loss of $200 million but will not impact adjusted earnings. Shares traded lower by 0.69% premarket.
The news of increased capital expenditure and a reported loss of $200 million could concern investors, potentially leading to a short-term negative impact on Equinor's stock price. The premarket dip in shares indicates initial investor reaction.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90