NEW YORK (TheStreet) -- As mergers and acquisitions go, the energy industry has seen some of the biggest, from the $80 billion merger between Exxon and Mobil in 1998 to the $15.1 billion takeover of Canada's Nexen by China's CNOOC (CEO) in 2012. With the recent double-digit drop in crude prices, another acquisition could be on the horizon, this time, of European oil giant BP (BP) .
BP is currently under investigation due to its role in the worst offshore oil disaster in the U.S. history, the 2010 Gulf of Mexico oil spill from BP's deepwater Macondo well. The company could be slapped with fines of around $18 billion, in addition to the $28 billion it has already spent on damages and clean up costs. This creates a significant uncertainty about BP's future which no other company would want to assume, said Howard Weil's analyst Blake Fernandez in an email to TheStreet.
In a Nov. 7 report, however, Oppenheimer's senior energy analyst Fadel Gheit said that a comprehensive oil spill settlement would remove the financial uncertainty, paving way for an acquisition. BP's shares have fallen by nearly 32% since the oil spill was reported more than four years ago and are down 16% for the year to date, now hovering around $41 each.
BP has been at the center of takeover speculation since the Gulf of Mexico disaster. This time, however, the futures of WTI and Brent crude have fallen by more than 20% over the last three months to multi-year lows. A persistent weakness in oil prices could lead towards an uptake in consolidation activity in the energy industry as oil producers join forces to achieve cost savings. This could make BP a "potential takeover target", Gheit wrote.
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