BP And ADNOC Propose to Acquire 50% Stake in NewMed for $2B

·3-min read

BP plc BP and Abu Dhabi National Oil Company (“ADNOC”) made a proposal to acquire a 50% stake in Israel-based offshore natural gas producer, NewMed Energy, for $2 billion.

As part of the deal, BP and ADNOC will form a joint venture focused on gas development in international areas of mutual interest, including the East Mediterranean. The deal will mark the company’s entry into Israel’s expanding energy sector.

The deal can potentially draw significant investment into the Israel energy sector. BP and ADNOC will acquire 45% of NewMed’s free-floating shares and an additional 5% owned by Israel-based conglomerate Delek Group. They have made a non-binding offer of 12.05 shekels for each share.

Once the deal closes, NewMed will become a private corporation, which will be equally held by the BP-ADNOC joint venture and Delek Group. Delek Group holds the remaining 50% stake in NewMed.

NewMed is the largest shareholder in the giant Leviathan offshore field, which produces 12 billion cubic meters (bcm) of gas supplied to Israel, Egypt and Jordan. The field partners are planning to double production to 21-24 bcm by 2027.

NewMed is also planning to develop Israel’s first liquefied natural gas export terminal to further boost exports. With a capacity of 4.5 million tons, the facility will be one of the largest floating liquefaction facilities in the world.

The move will strengthen BP’s presence in the eastern Mediterranean. The decision came after BP delayed its shift from oil and gas, and pledged to boost spending on renewables and low-carbon fuel by $8 billion by 2030.

The imperative to reduce the consequences of climate change becomes more important with each passing day.  The potential acquisition reflects BP's commitment to sustainability.

Price Performance

Shares of BP have outperformed the industry in the past six months. The stock has gained 31.1% compared with the industry’s 17.8% growth.


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Zacks Rank & Key Picks

BP currently carries a Zack Rank #3 (Hold).

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