Britain: A Very Good Bash Indeed

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When he was chosen to move up to the chairmanship of British Petroleum Co. last month, Deputy Chairman Eric Drake noted that he had already had "a pretty good bash at about every end of the business." Last week Drake was in the midst of a brand-new bash—one that could turn out to be very good indeed. In a lightning move that belied B.P.'s sure-but-slow reputation, Drake set plans to buy B.P.'s way into the American market at a cost of $300 million—one of the biggest single invasions of the U.S. by British capital ever.

Drake's adventure involved a week of swift, secret transatlantic negotiations with the "Lions" and "Tigers"—code names for Atlantic Richfield and Sinclair. If everything works out, British Petroleum will buy an Atlantic Richfield refinery in Texas, a Sinclair refinery in Pennsylvania, and a string of 5,600 Sinclair gas stations in eleven Eastern states and the District of Columbia. The deal hangs on Justice Department approval of a pending merger of Sinclair and Atlantic Richfield, which now may well pick up speed. One Justice hang-up has been that the merger would lessen competition in the East, where both companies have gas-station chains.

Do It in Dollars. For its part, British Petroleum has been looking for more than a decade for just such a U.S. opportunity. It operates in 70 countries, has access to 20% of the world's known reserves, and ranks third on FORTUNE'S list of the 200 biggest non-U.S. companies. Yet B.P. has never won any stars for marketing. Unlike its international rivals, the U.S. majors and Royal Dutch/Shell, it does not have a retail network big enough to even begin to sell its output, of which 85% comes from high-cost Middle East fields. As a result, B.P. has been forced to rely on sales of crude oil and pass up the more lucrative marketing of refined products. The U.S. stations, which will take on B.P.'s green and yellow colors, should help considerably. They outnumber B.P.'s own chain in Britain (4,900 stations), will bring B.P.'s worldwide total to 36,000 stations. To pay for them, B.P. has worked out a scheme that is fancier than Sinclair's Dino Dollars game. Because of the weakness of the pound, Her Majesty's government would never approve payment of $300 million in sterling. So B.P. plans to pay in dollars over a six-year period beginning in 1972. That is just about when the company's recent Alaskan strikes will presumably begin pouring out oil—and pulling in dollars—in quantity.

Have Another. That sort of strategy would have appealed to the company's early champion, Winston Churchill. As First Lord of the Admiralty in 1914, Churchill got the government to bankroll B.P.'s tottering predecessor, the pioneering Anglo-Persian Oil Co., thus ensuring fuel for the Royal Navy through two world wars. An equally happy mix of politics and oil has been overdue for Drake, who will formally take over from ailing Chairman Sir Maurice Bridgeman in January. Last year's closing of the Suez Canal forced shipping costs up; then came the Biafran civil war, which has stopped B.P.'s Nigerian production. Such woes held 1967 profits to a disappointing $154 million (on sales of $2.9 billion) as compared with this year's expected record of around $215 million.

Setbacks do not particularly upset