BP, Europe's second-largest oil company, could unlock $100 billion in shareholder value by following in the footsteps of U.S. rivals Marathon Oil (MRO) and ConocoPhillips by spinning off its refining and marketing business.
Earlier this week, ConocoPhillips (COP), the third-largest U.S. oil company, said it would spin-off its refining and marketing business into a separate publicly traded company next year. Following that news, analysts at Bank of America Merrill Lynch, JPMorgan and UBS said BP should follow suit.
JPMorgan Cazenove said last week BP's assets are equal to a market value of about $248 billion, but the British oil giant's current market value is $147 billion, according to Bloomberg News. Trading at a 40% discount to the value of its assets also means BP (BP) trades below the industry average of 27%, Bloomberg reported.
BP is currently looking to sell two of its U.S. refineries as part of its asset sales program aimed at raising cash for expenses tied to the Gulf of Mexico oil spill. Some analysts believe that once BP's Carson, California and Texas City, Texas are sold, the company will not have many refining assets left, making an outright spin-off of that business tough.
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