BP plc (BP) Expected to Lose Over $2B Worth of U.S. Gov't Contracts

November 30, 2012 11:21 AM EST Send to a Friend
BP plc (NYSE: BP) is ticking higher Friday amid news it closed a $5.55 billion Gulf of Mexico asset sale today. However, some other news is keeping shares in check today.

According to reports, BP has just over $2 billion in U.S. government contracts set to expire in the next two years. The awards are with the Defense Logistics Agency, which buys most of the fuel used by the Pentagon.

In total, about 11 awards will be up for competition. The U.S. DLA said it has no plans to sign a waiver to keep awarding the work to BP.

Bloomberg pegs the total value of all awards at about $2.43 billion.

News comes following the U.S. Environmental Protection Agency (EPA) temporarily banning BP from Gulf operations amid recent settlement of criminal charges over the Deepwater Horizon incident in 2010.

Should the DLA open up bids, Bloomberg notes that company which could benefit from the work include Royal Dutch Shell (NYSE: RDS-A), Chevron (NYSE: CVX), and Valero Energy (NYSE: VLO).

Though the total award is relatively small compared with BP's $130 billion market cap, little is known of whether more bans and/or lost contracts are in the works by the U.S. or other governments.

BP has been active in recent weeks, announcing a $1.3 billion sale of North Sea assets as well as appointing a new Upstream CEO in James McKay.
BP is up about 0.7 percent on Friday's session.


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