BP shareholders get $8bn of profits from sale of Russian stake

 

Shares in BP leapt today after the FTSE 100 oil giant unveiled plans to return $8bn (£5.3bn) to investors, a day after completing the sale of its troubled TNK-BP Russian joint venture.

BP will make the payment to its investors through a series of share buybacks that are intended to recompense them for the profits it will lose as a result of the TNK-BP sale.

BP chief executive Bob Dudley estimates that the buybacks will be equivalent to at least the next six years’ worth of dividends the oil company would have received had it held on to its 50% stake in TNK-BP.

The company is in a position to finance the buyback from the proceeds of its $26bn cash-and-shares sale of the Russian stake to Rosneft, after the deal was formally completed yesterday.

Santander analyst Jason Kenney said: “It’s good news that they’re returning that amount of cash, probably $2bn to $2.5bn more than what was anticipated.”

Shares in BP jumped 12.16p, or 3%, to 461.56p, as the buyback announcement formally called time on BP’s unhappy — though still profitable — involvement in the joint venture. Since it was set up in 2003, the venture has paid BP about $20bn in dividends, representing about a fifth of the group’s profits.

However, the partnership with AAR — the consortium of billionaire investors that owns the other half —  has frequently been fraught,  with hostilities escalating in 2011 following BP’s attempted tie-up with Rosneft.

The AAR consortium successfully blocked that tie-up in court on the basis that the TNK-BP shareholder agreement entitled them to first refusal on any opportunities within Russia.

The relationship between the two partners quickly became untenable and in October both agreed to sell their half of the joint venture to the state-controlled Rosneft.

BP’s cash-and-shares deal leaves it with a 19.75% stake in Rosneft, making it the second-biggest shareholder after the Kremlin and paving the way for the pair to work together inside and outside of Russia.

Dudley said: “BP is moving on to the next phase of its business in Russia… We look forward now to working closely with Rosneft and together developing opportunities to create value for both companies.”

The buyback should go some way to appeasing BP’s investors who have seen their dividends — and their shares — tumble following the Gulf of Mexico oil spill in 2010.

Before that disaster, BP’s annual payout for 2009 came in at 36.4p a share and accounted for £1 in every £6 of the dividends paid to UK pension funds. Initially the dividend was suspended following the Gulf of Mexico accident, but it has since been reinstated and has risen steadily. However, at 16.67p in 2012, it is still less than half of its peak value.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Recruitment Genius: Administrator - IFA Based

£22000 - £24000 per annum: Recruitment Genius: This is an opportunity to join ...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions