BP's boss met officials from Abu Dhabi state funds on Wednesday as prospects for fresh investment and progress toward closing a leaking U.S. oil well lifted the company's battered shares.
A United Arab Emirates official said Chief Executive Tony Hayward had met officials from Abu Dhabi Investment Authority (ADIA) during a routine visit.
He spoke as speculation mounted of a stake purchase by a Middle East or Asian sovereign wealth fund such as ADIA to help BP ward off takeovers and pay the rising costs of the worst oil spill in U.S. history. One report said Saudi investors were looking to buy 10 to 15 percent.
The UAE official, speaking on condition of anonymity, said Hayward's visit was a scheduled one mainly to discuss BP's concessions with Abu Dhabi National Oil Company (ADNOC). Hayward was also seen by Reuters in the company of a senior officials from another state investment fund.
BP has said it has no plans to issue new equity, but bankers say it is on a marketing drive for its stock, which has fallen by half since the Gulf of Mexico well blew out in April.
We are here to talk to our existing shareholders, a cheerful-looking Hayward told Reuters in the ornate, marble lobby of an Abu Dhabi office building before heading into a meeting there along with his six-man entourage.
The relief well being drilled to halt BP's spill is a week ahead of schedule, the U.S. official overseeing the response to the disaster said on Tuesday. However, mid-August remains the target date for completion of drilling of two relief wells, he added.
BP shares, already on the rise in recent days, rose a further 9 percent in New York trade and reached their highest since June 21 in London on Wednesday, standing 4.25 percent higher at 360 pence at 1406 GMT.
With the CEO in Abu Dhabi speaking to the sovereign wealth fund to get some investment it's not surprising that there is some enthusiasm in the market for BP shares, said Mic Mills, head of electronic trading at London-based ETX Capital.
Progress on the relief well is also a factor lifting the investor mood.
Anything that would speed up the process, or any kind of success at all as far as capping it, would be a welcome relief, said Alan Lancz, president at Alan B. Lancz & Associates Inc in Toledo, Ohio.
A third vessel at the leak site that will more than double BP's oil-capture capacity to 53,000 barrels a day from around 25,000 is now partially hooked up, but rough seas are hampering efforts to finish the job. Estimates of the leak's severity vary widely and run as high as a 100,000 barrels per day.
BP is already committed to a $20 billion fund for clean-up and other costs stemming from the spill. Its costs to date have topped $3 billion.
The final costs would depend on how much crude has leaked from the well, which blew when a rig exploded on April 20, killing 11 workers.
Analysts said that barring other negative news, the stock may have found a floor.
We're optimistic that the news can get better from there. The talk about sovereign buyers may not lead to anything, but it certainly means that value-orientated investors are seeing opportunity. said Kurt Wulff, president at McDep LLC, an oil and gas research firm in Needham, Massachusetts.
The spill is wreaking havoc on coastal ecosystems, fishing communities and a tourist industry seen as especially important during a time of high unemployment. It has also thrust itself to the top of President Barack Obama's crowded domestic agenda and presented a tough test for his leadership.
TALKS WITH SOVEREIGN FUNDS
BP executives held talks with sovereign wealth funds in Abu Dhabi, Kuwait, Qatar, and Singapore, seeking a partner who might help it avoid being taken over, a UAE source said on Tuesday.
Abu Dhabi's International Petroleum Investment Company (IPIC), was not interested in buying a stake in BP, a source at the company said. IPIC invests in global oil and gas assets.
A spokesman for ADIA declined to comment.
Sovereign funds holding BP stakes include Norway and Kuwait, controlling about 1.8 percent each, while China owns 1.1 percent and Singapore 0.7 percent, according to Thomson Reuters data.
Hayward's meeting in Abu Dhabi concerns an oil concession that dates back to 1939 and is due to expire in 2014.
BP is a minority stakeholder in Abu Dhabi Company for Onshore Oil Operations (ADCO). Talks on renewal have been going on between Abu Dhabi authorities and companies involved for years.
ADCO is responsible for onshore oil production in the emirate, which holds most of the UAE's oil reserves.
State run ADNOC holds 60 percent of the concession. BP holds 9.5 percent, as do Royal Dutch Shell, Total and Exxon Mobil. (For a FACTBOX on the UAE's main oil and gas concessions, double click on).
BP confirmed on Wednesday that it had received a letter from the U.S. government, but would not comment further on a report that the Department of Justice had asked on June 23 to be consulted in advance about any asset sales or transactions.
TAR BALLS REACH TEXAS
Tests this week showed tar balls washed up on the Texas coast were from the spill, meaning every U.S. Gulf state -- Louisiana, Mississippi, Alabama, Florida and now Texas -- has been soiled by the spill.
There was a chance disturbed weather over the southern Gulf of Mexico could strengthen into a tropical storm this week, the U.S. National Hurricane Center said.
Although it was not expected to travel over the site of the blown-out BP well, it could come closer than Hurricane Alex, which interrupted the cleanup operations last week.
(Additional reporting by Matthew Bigg in Bay Jimmy, La., Sarah Young in London, Stanley Carvalho in Abu Dhabi and Shaheen Pasha in Dubai, Tom Brown in Miami, Anna Driver in Houston and Ryan Vlastelica in New York; writing by Tamara Walid and Andrew Callus; Editing by Mike Nesbit and David Cowell)