As a result, BP is actually raising its payout to 9 cents per share – an increase of 12.5%. And Dudley’s confidence has prompted a buying bonanza on the markets. BP’s shares were up nearly 4% in early trading to 441p.
Dudley has good reason for his optimism. BP has just sold 50% of its stake in TNK-BP, the joint venture it runs with a consortium of Soviet-born oligarchs, to Rosneft in a cash-and-shares deal worth $27bn. While the deal reduces the size of BP considerably, BP is left with a nice chunk of change: $12.3bn in cash and a 19.75% stake in Rosneft to boot.
The deal is a turning point for BP, which is raising money to cover the ongoing costs of the Deepwater Horizon disaster. Since the start of 2010, BP has sold around $35bn worth of assets, against its target of $38bn.
But the business is making decent returns too. Profits have also been plumped up with some clever restructuring of BP’s refining operations: this division has just brought in record quarterly underlying earnings. New projects are also bringing in a whole lot of new cash, but overheads at BP are climbing due to seasonal maintenance. The weather conditions out in the North Sea and the impact of hurricane Isaac on the Gulf Coast have caused a few headaches.
Despite having to tinker with rigs and drills and such, BP has managed to produce 2.26m barrels a day of oil and gas over the period, just 3% down on a year ago. But with the end of maintenance season nigh, BP reckons production will increase in the fourth quarter. According to its results statement, since 2010 BP has accessed twice the new acreage it had accessed in the previous nine years, creating a ‘much larger exploration prospect inventory’ – it’s found many more lucrative oil sites, in translation. With nine exploration wells due for completion this year, and 15-25 wells a year forecast to be built each year in the future, BP’s investors will be sitting pretty for this financial year and next.