BP is close to a deal with its oligarch co-owners of TNK-BP that would see board changes at the Russian oil major, the departure of TNK-BP's BP-nominated chief executive, and which could lead to 20% of TNK-BP being floated, an industry source said on Thursday.
BP shares rose more than 2% on the news of a framework deal which would bring an increasingly hostile battle for control of Russia's third-largest oil producer that has raged for months, to an end.
The British oil company had accused its partners of orchestrating a campaign of state harassment against TNK-BP and its officers as a means of securing keys demands including the departure of CEO Bob Dudley.
The industry source with knowledge of the situation said BP had made concessions towards their partners' demands in order to end the battle, which had weighed on BP's shares.
The two sides will likely sign a deal, possibly as early as later on Thursday, that could lead to an initial public offering (IPO) of up to 20% of the shares of a specially created new company that would control all the assets of TNK-BP.
The agreement would involve TNK-BP CEO Dudley, who has been accused by the Russian side of favoring BP's interests in managing the Russian firm, stepping down in the coming months, the source said.
TNK-BP's board would be restructured so that each side would no longer have half the seats, with the balance held in future by independent directors, the source added.
SHARES RISE
A BP spokesman declined to confirm a framework deal had been agreed. "We are talking but no agreement has been signed," he said.
TNK-BP was not immediately available for comment.
The comments confirm earlier reports in Russian newspaper Vedemosti and Britain's Financial Times.
"A deal would be good for BP," said an analyst, adding that investors in the company had already discounted an almost total loss of its interest in TNK-BP.
BP shares were up 2.5% to trade at 518.75 pence at 3:08 a.m. EDT, outperforming a 1% rise in the DJ Stoxx European oil and gas sector index.
Vedomosti said BP CEO Tony Hayward and Mikhail Fridman, one of the four billionaire co-owners and who has taken the lead in representing the Russian side in the dispute, could meet on Thursday to sign the agreement.
The new CEO will be independent from both sides and have less authority than Dudley, Vedomosti reported. The new CEO would not, for example, be able to nominate the board of directors of key units.
Dudley is currently managing the company from overseas after he left Russia in July citing harassment. He has since been banned by a Moscow court from working in the country for two years.
The IPO may be carried out within the next two years, Vedomosti said.
Reuters reported last week that the two sides were nearing a deal.
