Thursday 31 October 2013

British Petroleum report Q3 2013

A UK oil and energy company

A few days ago British Petroleum delivered their third quarter report, which can be found here. Last thing I heard from the BP management was that they were annoyed with how they were being treated in the US legal system and had therefore decided to put their foot down. At least they themselves claimed that they wanted to do the correct thing and pay for the damages that had occurred but have now started to feel abused since anyone was getting money without having, once again according to them, legitimate claims on them and especially the lawyers were getting far too much money.

In the Q2 report we could see the effect of the sale of TNK-BP which made a large drop in production and the production gain from Rosneft was then not yet in effect therefore it would be interesting to see in this report what had happened there in the last quarter.

To summarize a few of their highlights:

  • They have decreased their net debt from 31 billion USD one year ago to around 20 billion USD today.
  • They will divest additional 10 billion of assets to give to shareholders and to be used for share buybacks.
  • They have bought back 465 million shares for 3.3 billion USD and they intend to buy back shares for 8 billion USD.
  • 3.17 million barrels produced per day of which 0.965 millions are now from Rosneft.

British Petroleum, income, third quarter 2013

What we see in the nine months running is that Rosneft has not fully been able to cover the production loss that came from the sale of TNK-BP. In terms of barrels I would still say that Rosneft seems to work out very well.
There has been a slight decrease in the Upstream during the nine months but the Downstream has been doing very well compared to 2012 however that comes mainly from much less Non-Operating Items losses in especially the US so if we look at the real revenue with the Downstream then that was much less than in 2012 (it has dropped by almost 1.5 billion USD)

The also reported about a lot of nice explorations with oil and gas, alone and as part of different cooperation constructions.

In the report part concerning the litigation processes there was one statement that said that the claims administrator is temporary suspended from paying out business economic losses unless there is sufficient data available... Who decides what is sufficient? The claims administrator? Anyway... I hope that all the people that have received real damage will be compensated. No damage, no money and especially not to the lawyers.

Conclusion: BP is currently doing a lot to satisfy their shareholders, they increase dividend and they make significant share buyback. I do feel pretty satisfied and will definitely keep my shares. I like my quarterly dividend payments and I also realise that I should have taken it as shares instead of cash and the next time I get the papers to decide I will have to think about what to do. I am happy to see that Rosneft is now running and I see that as an important investment for BP in the future as I have mentioned before.

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