What’s going on?

• BHP (the world’s most valuable mining company) is close to selling its oil and gas business.

What does this mean?

• While BHP’s main business is extracting raw copper and iron ore, oil and gas business also represented 9% of its total revenue last year.
• However, that activity is still classified as “non-core”. Shareholders are also exerting pressure BHP to grow greener, especially after the recent landmark climate change report calling for immediate action on CO2.
• Therefore, selling the business seems like an easy win that could give BHP a net US$15b.

Why should I care?

The bigger picture: Green who?

• On the other hand, activist investors seem unlikely a concern for the Kingdom of Saudi Arabia (who own 98.5% of Aramco’s stock). 
  • Aramco plans to expand its oil production capacity to 13m barrels a day (up from the current 12m).
  • Aramco has also been in advanced discussions to buy a 20% stake of Reliance Industries‘s (Indian) oil refining and chemicals business for US$25b. After failing to make the deal happen a year ago, both companies now appear keener to reach some synergies.

Zooming out: Transpotation industry by your side

Faurecia (French auto part supplier) agreed to buy Hella (German) for US$8b as one of the industry’s biggest-ever deals. With annual sales of US$27b, the combined company is well-positioned to to benefit from the transportation future – whether gas-guzzling, electric, or autonomous.

Content source: Finimize (2021) Where The Magic Happens. Available at: https://www.finimize.com/wp/news/oil-is-dead-long-live-oil/ [Accessed on Aug 17, 2021]