LONDON — BP returned to profitability with a better-than-expected third-quarter profit, prompting the oil giant to raise its dividend.
“Overall this is a much better result than the poor second quarter,” said Stuart Joyner, an analyst at Investec in London.
The company posted earnings of $5.4 billion for the three months ending on Sept. 30. That compared with a loss of $1.4 billion loss in the previous quarter, when the company took writedowns on the value of its U.S. refineries and other assets.
It was also a slight improvement on the $5 billion BP earned in last year’s third quarter. BP said it was raising its quarterly dividend by more than 12 percent, to 9 pence or 14.4 cents a share. The company’s share price rose more than 5 percent in morning trading in London.
Two years after taking over as chief executive in the wake of the Gulf of Mexico disaster, Bob Dudley appears to be putting his stamp on the company.
He has said from the beginning that he wanted to use the oil spill as an opportunity to streamline BP into more of a high-risk, high-reward exploration and production company.
For instance, BP said that during the three month period it had reached agreements to sell $11 billion in assets, bringing its total asset sales to $35 billion since the beginning of 2010. That is close to BP’s target of $38 billion by the end of 2013.
The most recent sell-off was a $2.5 billion agreement to sell the Texas City, Texas, refinery, where an explosion killed 15 people in 2005, to Marathon Petroleum for $2.5 billion.
Not included in those calculations is Mr. Dudley’s boldest move: the recent agreement to sell BP’s 50 percent share of its Russian affiliate TNK-BP.
In that complex transaction, BP is to receive $12.3 billion in cash and a 19.75 percent stake in Rosneft, the Russian national oil company.
The transaction has been valued at about $27 billion. In a call with reporters on Tuesday, Mr. Dudley said that BP planned to substantially increase exploration drilling, moving to 15 to 25 wells per year from nine currently.
This year BP is drilling in Brazil, Angola and Namibia. Mr. Dudley said that the changes “created a strong foundation for our future.” Despite the moves and the rise in the stock price, there are still plenty of signs that BP is a wounded company.
The improved results for the quarter were largely the results of refining and marketing operations, some of which BP is selling. Like other companies, BP probably is benefiting from discounted prices of crude going into its refineries.
Production in the United States — where BP has high-margin oil — was down slightly. Moreover, BP has not reached a settlement with the U.S. government on damages from the Gulf spill.
The company has seven drilling rigs — the most it has ever had — operating in the highly profitable Gulf of Mexico to restore production and bring new output online.
“We are still waiting for evidence of a turnaround in the Gulf,” said Peter Hutton, an analyst at RBC Capital Markets in London. BP also responded to pressure from investors to increase its dividend.
“The markets were reassured by the rise in the dividend,” Mr. Hutton said. “This was indicative of greater confidence in an improvement in cash flows.”
BP’s position in Russia is perhaps where it may have the biggest lead on rivals, despite the problems with TNK-BP. The investment in TNK-BP was enormously profitable for BP, but an exit was perhaps unavoidable. The TNK-BP partnership was plagued by infighting with BP’s Russian partners.
The sale to Rosneft was probably the only one BP could have made. And because BP will be able to claim Rosneft’s production and reserves, it will not lose much in output from hiving off TNK-BP and may actually gain in reserves.
Where it will lose is cash flow. TNK-BP has provided an annual average of $2.2 billion per year in cash dividends to BP, according to Bernstein Research. Rosneft is only likely to provide about $500 million, Bernstein says.
But BP is gaining $12.3 billion in cash on the sale. The test of the Rosneft deal will be what BP gains over the longer term.
BP’s taking a nearly 20 percent stake in a Russian oil company and gaining two seats on the board “breaks new ground” not only in Russia but globally, according to Valerie Marcel, a researcher on national oil companies at the research organization Chatham House, in London.
“It’s a very good way to get information on the opportunities about to arise in Russia,” Ms. Marcel said, “because Rosneft is the flagship oil company — the one that is being given the pre-emiment role.”
During the call on Tuesday, Mr. Dudley said, “We look at Rosneft as a company that has tremendous potential to become more efficient as well as in many projects going forward.”
He said that the board seats would give BP the “opportunity to comment on and take part in investment decisions going forward.”
He noted that Rosneft was the largest holder of licenses on the Russian continental shelf, where there is an estimated 190 billion barrels of recoverable oil and gas — a massive amount — is located. But whether BP can take advantage of what could be a privileged perch in always turbulent Russia remains to be seen.
nytimes.com
“Overall this is a much better result than the poor second quarter,” said Stuart Joyner, an analyst at Investec in London.
The company posted earnings of $5.4 billion for the three months ending on Sept. 30. That compared with a loss of $1.4 billion loss in the previous quarter, when the company took writedowns on the value of its U.S. refineries and other assets.
It was also a slight improvement on the $5 billion BP earned in last year’s third quarter. BP said it was raising its quarterly dividend by more than 12 percent, to 9 pence or 14.4 cents a share. The company’s share price rose more than 5 percent in morning trading in London.
Two years after taking over as chief executive in the wake of the Gulf of Mexico disaster, Bob Dudley appears to be putting his stamp on the company.
He has said from the beginning that he wanted to use the oil spill as an opportunity to streamline BP into more of a high-risk, high-reward exploration and production company.
For instance, BP said that during the three month period it had reached agreements to sell $11 billion in assets, bringing its total asset sales to $35 billion since the beginning of 2010. That is close to BP’s target of $38 billion by the end of 2013.
The most recent sell-off was a $2.5 billion agreement to sell the Texas City, Texas, refinery, where an explosion killed 15 people in 2005, to Marathon Petroleum for $2.5 billion.
Not included in those calculations is Mr. Dudley’s boldest move: the recent agreement to sell BP’s 50 percent share of its Russian affiliate TNK-BP.
In that complex transaction, BP is to receive $12.3 billion in cash and a 19.75 percent stake in Rosneft, the Russian national oil company.
The transaction has been valued at about $27 billion. In a call with reporters on Tuesday, Mr. Dudley said that BP planned to substantially increase exploration drilling, moving to 15 to 25 wells per year from nine currently.
This year BP is drilling in Brazil, Angola and Namibia. Mr. Dudley said that the changes “created a strong foundation for our future.” Despite the moves and the rise in the stock price, there are still plenty of signs that BP is a wounded company.
The improved results for the quarter were largely the results of refining and marketing operations, some of which BP is selling. Like other companies, BP probably is benefiting from discounted prices of crude going into its refineries.
Production in the United States — where BP has high-margin oil — was down slightly. Moreover, BP has not reached a settlement with the U.S. government on damages from the Gulf spill.
The company has seven drilling rigs — the most it has ever had — operating in the highly profitable Gulf of Mexico to restore production and bring new output online.
“We are still waiting for evidence of a turnaround in the Gulf,” said Peter Hutton, an analyst at RBC Capital Markets in London. BP also responded to pressure from investors to increase its dividend.
“The markets were reassured by the rise in the dividend,” Mr. Hutton said. “This was indicative of greater confidence in an improvement in cash flows.”
BP’s position in Russia is perhaps where it may have the biggest lead on rivals, despite the problems with TNK-BP. The investment in TNK-BP was enormously profitable for BP, but an exit was perhaps unavoidable. The TNK-BP partnership was plagued by infighting with BP’s Russian partners.
The sale to Rosneft was probably the only one BP could have made. And because BP will be able to claim Rosneft’s production and reserves, it will not lose much in output from hiving off TNK-BP and may actually gain in reserves.
Where it will lose is cash flow. TNK-BP has provided an annual average of $2.2 billion per year in cash dividends to BP, according to Bernstein Research. Rosneft is only likely to provide about $500 million, Bernstein says.
But BP is gaining $12.3 billion in cash on the sale. The test of the Rosneft deal will be what BP gains over the longer term.
BP’s taking a nearly 20 percent stake in a Russian oil company and gaining two seats on the board “breaks new ground” not only in Russia but globally, according to Valerie Marcel, a researcher on national oil companies at the research organization Chatham House, in London.
“It’s a very good way to get information on the opportunities about to arise in Russia,” Ms. Marcel said, “because Rosneft is the flagship oil company — the one that is being given the pre-emiment role.”
During the call on Tuesday, Mr. Dudley said, “We look at Rosneft as a company that has tremendous potential to become more efficient as well as in many projects going forward.”
He said that the board seats would give BP the “opportunity to comment on and take part in investment decisions going forward.”
He noted that Rosneft was the largest holder of licenses on the Russian continental shelf, where there is an estimated 190 billion barrels of recoverable oil and gas — a massive amount — is located. But whether BP can take advantage of what could be a privileged perch in always turbulent Russia remains to be seen.
nytimes.com
No comments:
Post a Comment