BP Makes Foray Into Continental Europe's Offshore Wind Market

BP plc came as a major winner in a 7-gigawatt (GW) offshore wind site auction in Germany, marking its entry into the offshore wind market in continental Europe.

BP and France-based TotalEnergies acquired development rights for four sites in the Germany dynamic tender round, with combined bids of €12.6 billion.

Three sites are situated 120 kilometers northwest of Heligoland in the North Sea. The sites are intended to develop 2 GW of offshore turbine capacity. The remaining one with 1 GW is located in the Baltic Sea.

BP acquired rights to develop two projects, representing 4 GW of the total capacity. TotalEnergies received awards for the other two sites.

The awards align well with BP’s integrated energy strategy and disciplined capital allocation. The company expected returns of 6-8% from the project. The latest move is crucial step in implementing BP’s strategy to become a profitable integrated player in the electricity markets.

BP is on track to capitalize on the global economy's transition to lower carbon fuels. Germany is a leading market for BP and the latest initiative is milestone for its decarbonization plans in the country.

BP’s initial payments will be €678 million, which is equivalent to 10% of the bid amount. The amount will be paid by July 2024. The rest will be paid over 20 years once the projects come online.

The results confirm the attractiveness of investments in offshore wind energy in Germany. Around 90% of the tender’s revenues will be allocated toward reducing electricity expenses and marine protection measures.

BP currently carries a Zack Rank #3 (Hold). Some better-ranked players in the energy space are Oceaneering International, Inc. and Seadrill Limited, currently sporting a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

One of the leading suppliers of integrated technology solutions, Oceaneering boasts an impressive portfolio of diversified products and services. OII has a Zacks Style Score of A for Momentum.

Oceaneering has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for OII’s 2023 and 2024 earnings per share is pegged at $1.12 and $1.29, respectively.

Seadrill is a market-leading international driller with strong exposure in key strategic basins like the U.S. Gulf of Mexico, Brazil and Angola. SDRL reported first-quarter 2023 earnings of 83 cents per share, beating the Zacks Consensus Estimate of earnings of 55 cents per share.

Seadrill has witnessed upward earnings estimate revisions for 2023 and 2024 in the past 30 days. The consensus estimate for SDRL’s 2023 and 2024 earnings per share is pegged at $2.93 and $4.01, respectively.

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