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July 28, 2008

Shell most likely to take over BP

Analysis of: The retreat from Moscow | www.guardian.co.uk
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Hans Linhardt, PresidentHans Linhardt
President, LTDI, Inc.
Implications: It has been widely reported that TNK-BP CEO Robert Dudley departed just now from Moscow, humiliated and driven out by BP's oligarch partners. Former BP CEO and chairman Lord Browne had his confrontations with the oligarch partners, but believed the formation of TNK-BP (50:50) was worth the risk to have a stake in Russia's vast oil and gas reserves.    

Analysis: Under Lord Browne BP overreached their management capabilities and attention to detail as exhibited by the Texas City refinery explosion, the Alaskan pipeline rupture, propane trading irregularities and now the debacle with TNK-BP.  Oppenheimer & Co. brokerage in New York recommends for BP to sell their stake in TNK-BP according to the Guardian article cited above.

Of course, BP is now more vulnerable to a takeover, something that has been speculated since the Texas City refinery explosion.

We do not believe ExxonMobil will take the bite.  The cultures and interests are too diverse.  As we have written before - and now the Guardian has come to the same conclusion - Shell and BP should merge.  This event would also open the door to some more consolidation of the major US oil & gas companies in order to be more competitive in the US and global market place.

Other Analyses of the Same Source Article:
BP Has Upper Hand in TNK-BP Saga
July 29, 2008, Author: GLG Expert Contributor
BP Must Reconcile with AAR
July 28, 2008, Author: GLG Expert Contributor

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