BP Completes $4.1Bn Buy Of Biogas Player

BP has completed its purchase of Archaea Energy, a provider of renewable natural gas for $4.1 billion.


Supermajor BP has completed its purchase of Archaea Energy, a provider of renewable natural gas (RNG), marking a milestone in the expansion of the company’s bioenergy business.

In October, BP agreed to acquire Archaea, subject to regulatory and Archaea shareholder approval. Having received those approvals and with the transaction complete, Archaea expands BP’s presence in the US biogas industry.

BP added that the acquisition would also enhance its ability to support customers’ decarbonization goals and progressing its aim to reduce the average lifecycle carbon intensity of the energy products it sells.

Bioenergy is one of five strategic transition growth engines that BP intends to grow rapidly through this decade. The supermajor expects investment into its transition growth businesses to reach more than 40 percent of its total annual capital expenditure by 2025, aiming to grow this to around 50 percent by 2030.

According to BP, Archaea common shares will cease to be listed on the NYSE following the close of the agreement.

“We see enormous opportunity to grow our bioenergy business by bringing Archaea fully into BP,” said Dave Lawler, chairman and president of BP America. “The talent, expertise and passion of their team has let them achieve incredible growth so far, and we’re excited to support the next chapter in line with our strategy.”

To remind, BP agreed to acquire biogas producer Archaea Energy for about $4.1 billion including debt. BP paid $26 per share, a 38 percent premium.

Archaea was formed in 2021, when Rice Acquisition Corp. merged with two other companies to create a giant in so-called renewable natural gas. The environmental benefit of the fuel comes largely from preventing emissions of the powerful greenhouse gas methane, which is created by the decomposition of organic waste under certain conditions.

In its latest guidance, Archaea said it planned to produce 10.9 billion cubic feet of gas a year, about 0.5% of BP’s total gas output.

At the time of the 2021 deal, Archaea was valued at $1.15 billion. Since then, Russia’s invasion of Ukraine has boosted natural gas prices worldwide, while President Joe Biden’s push for action against climate change is set to increase demand for lower-carbon fuels.

To contact the author, email bojan.lepic@rigzone.com

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