Shares in oil giant BP (BP) flowed higher today after it sold its U.S. onshore wind business to energy infrastructure group LS Power.
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Bread and Butter
The offloading of 10 wind farms producing a total power of 1.3 gigawatts (GW) is part of BP’s move away from a renewable energy focus back to its more bread and butter oil and gas operations.
It announced earlier this year that following pressure from activist investor Elliott Management, it would tilt away from green energy including a $20 billion program to sell off assets such as wind farms.
Elliott argued that the focus on renewables, and an aim to make the company net zero by 2050, was making BP uncompetitive against its peers. Evidence for that can be seen in the chart below.
BP did not disclose how much the sale was worth, but said it was part of its aims to offload between $3 billion and $4 billion worth of assets in 2025, under that wider $20 billion target.
It confirmed that before the deal, it had already struck sales worth $1.5 billion dollars by the end of the first quarter.
The acquisition of BP Wind Energy North by development, investment and operating company LS Power is expected to conclude by the end of the year. The farms will be owned and operated as part of LS Power portfolio company Clearlight Energy, increasing its operating fleet to around 4.3GW.
Trump Isn’t Sustainable
William Lin, BP EVP for gas & low carbon energy, said, “We have been clear that while low carbon energy has a role to play in a simpler, more focused bp, we will continue to rationalize and optimize our portfolio to generate value.”
The move comes in the midst of President Trump’s obvious preference for ‘Drill, Baby, Drill’ oil and gas activities. Since he has returned to the Oval Office he has cracked down on renewable energy development projects and cut subsidies for other energy transition sectors such as electric vehicles.
However, a number of sustainable industry experts believe that the long-term fundamentals behind renewable energy are still strong as countries focus on energy transition and independence.
Is BP a Good Stock to Buy Now?
On TipRanks, BP has a Hold consensus based on 3 Buy, 6 Hold and 1 Sell ratings. Its highest price target is $35. BP stock’s consensus price target is $32.19, implying a 0.31% upside.
