TNK-BP reports doubling in profits as owners quarrel
TNK-BP on Wednesday reported a near doubling in first quarter profits, highlighting the allure of a firm that has long been seen as the crown jewel in the assets of the British oil giant.
TNK-BP -- jointly owned by BP and a powerful group of Russian tycoons -- reported a 91-percent year-on-year jump in net income to $2.4 billion and a two percent increase in oil and gas production.
The strong figures underscore the firm's status as one of the world's 10 biggest private energy producers and help back up the oligarchs' claims that their stake holds long-term value far outweighing any buyout offers from BP.
"Such outstanding performance once again underscores the tremendous value and promise of TNK-BP -- one of the most dynamic and profitable oil and gas companies in the world," chief executive Mikhail Fridman said in a statement.
Fridman noted this growth came "despite disruptions at the shareholder level" -- a clear reference to the boardroom battle the tycoons have been waging for the past three months against their British partners.
BP has been enticing the Russian half of TNK-BP to accept the terms of a buyout that could pave the struggling global company's way toward a tie-up with the state-held behemoth Rosneft.
The $16 billion share swap and Arctic exploration agreement was meant to herald a new era for BP in which it blazed the trail to unexplored energy fields while putting behind it the costly 2010 Gulf of Mexico oil spill.
The deal was blessed personally in January by Prime Minister Vladimir Putin but then blocked by a Stockholm tribunal that sided with the Russian parters' complaints.
Fridman and his two main associates feared that the BP-Rosneft alliance would make their own company redundant and cut them off from future energy growth prospects.
They argued successfully that the deal broke TNK-BP's shareholder agreement, and now represent a peculiar challenge not only to BP but also the Russian government's plans to probe the Arctic with the help of a seasoned partner.
Rosneft has brushed aside TNK-BP's offer to work jointly in the Arctic and further refused suggestions that it was willing to help BP buy out the intransigent tycoons.
Analysts said this left much of the onus on BP amid indications from Putin that he was not willing to get involved in the conflict.
BP's future in Russia clouded further last week when the tycoons confirmed plans to sue their British partners for damages while announcing that they viewed TNK-BP as a lifelong investment.
They had already brushed aside one BP offer believed to be worth $27 billion -- a price in line with a valuation of $54.1 billion put on TNK-BP by Moscow's Finans magazine.
But BP was offered a glimmer of hope this week when a top Russian shareholder hinted he was willing to sell his stake.
"Of course it can happen," TNK-BP co-owner Viktor Vekselberg told the BBC when asked about a potential BP buyout.
"If it is (an) interesting proposal for us according to our understanding of the valuation of this company, of course we can accept."
The Vedomosti business daily reported on Wednesday that the Russian partners were now asking $40 billion for their stake.
© 2011 AFP