Fund Manager Says BP Should Shrink To Grow

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Fund manager Adrian Frost of the Artemis Income Fund, said BP, Europe's second-largest oil company, and other oil majors should consider further asset sales in an effort to revive their sagging growth prospects, according to an interview with Investment Week.

BP (BP) has already sold roughly $25 billion in assets to raise cash for liabilities tied to the Gulf of Mexico oil spill and investors have pushed CEO Bob Dudley to divest even more assets to boost the company's growth outlook and raise more cash.

''The premium achieved on some of those sales were 30%-40% over analyst valuations. I look at BP's discount to net asset value, at around 40%, and ask whether the share price will get close to NAV again. I would say the answer is no,'' Frost told Investment Week.

Following the July announcement by ConocoPhillips (COP), the third-largest U.S. oil company, that it will spin-off its refining and marketing operations next year, analysts at Bank of America Merrill Lynch, JPMorgan and UBS said BP should consider a similar move to unlock shareholder value.