S&P Lifts BP Outlook To Stable; Sees Less Downside Risk

- S&P Lifts BP Outlook To Stable; Sees Less Downside Risk

Wednesday, July 06, 2011
Dow Jones Newswires
by Melodie Warner

Standard & Poor's Ratings Services revised its credit outlook on BP to stable from negative, saying it sees less downside risk to the oil company's credit quality and little evidence of further erosion to its business standing.

The ratings company also affirmed BP's long-term corporate credit rating of A, which is five steps below the coveted AAA.

"The stable outlook reflects our view that BP is well positioned to meet potentially substantial additional fines and other payments related to the Gulf of Mexico disaster," the firm said. For its analysis, S&P assumes that all Gulf of Mexico-related payments will total less than $55 billion and will be spread over several years.

The ratings firm noted BP's first-quarter average realized oil price was 19.2% higher than the fourth quarter, and rose 31% from a year earlier. BP's refining margins also expanded in 2011, while its underlying downstream operating profit increased to $2.1 billion in the first quarter, from a quarterly average of $1.2 billion in 2010, despite a 6% decline in refining throughput, S&P said.

But, a sustained decline in oil prices below $70 a barrel alongside underlying operating cash flow of less than $25 billion could put downward pressure on the ratings, S&P said. Any upside rating potential is limited until there is more clarity on the penalties BP could face in the U.S. for the Gulf of Mexico oil spill.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Ex-BP Chief's Vallares Lifts IPO Size to $2.18B

- Ex-BP Chief's Vallares Lifts IPO Size to $2.18B

Friday, June 17, 2011
Dow Jones Newswires
LONDON
by Alexis Flynn & Selina Williams

Vallares, the new investment vehicle headed by financier Nathaniel Rothschild and former BP chief executive Tony Hayward, raised GBP1.35 billion ($2.18B) to invest in emerging-market oil and gas assets, some 35% more than it had anticipated.

Hayward said the level of support "demonstrates the confidence investors have in the strong fundamentals of the resources sector," and said the company will now search for "suitable acquisition opportunities."

Vallares is a cash shell that will use the capital raised to merge or invest with existing companies. Hayward said last week it would look at assets worth between GBP3 billion and GBP8 billion.

Co-founder Julian Metherell said the majority of investor interest came from U.S. and U.K. long-only funds and hedge funds, with some support from Middle Eastern sovereign wealth funds.

Vallares' founders--Hayward, Rothschild, Metherell and Tom Daniel--invested GBP100 million, of which GBP80 million is in ordinary share capital and GBP20 million in incentivized shares and securities designed to ensure an acquisition happens within a mandated timeframe.

Metherell said it was "very likely" Hayward would head an acquired company, marking his return to the spotlight less than a year after he left BP in the wake of the Deepwater Horizon disaster and Gulf of Mexico oil spill.

"He is a world-class CEO. I think any partner who wanted to come into Vallares would be hard pressed to find a better person to run a company than T. Hayward," said Metherell.

Metherell said voting rights for any majority owners following a transaction would be capped at 29.9%.

Vallares earlier Friday placed 133 million ordinary shares at GBP10 a share. Conditional dealings began Friday under the ticker symbol VLRS, and at 0927 GMT they were trading down five pence, or 0.5%, at 995 pence, slightly underperforming a 0.2% decline in the FTSE 100 index.

Admission to the London Stock Exchange and unconditional dealings on the main market for listed securities is expected 0700 GMT on June 22.

Vallares is so named in a nod to Rothschild's earlier commodities venture Vallar, and the two companies' business models do chime. Rothschild last year raised $700 million before buying Indonesian coal assets valued at some GBP3 billion. Shares in Vallar have risen 21% since their summer 2010 debut.

Credit Suisse is acting as global coordinator and joint bookrunner, J.P. Morgan Cazenove is acting as joint bookrunner and Evolution Securities is acting as co-lead manager in the share placing.

Copyright (c) 2011 Dow Jones & Company, Inc.

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