TNK-BP Disposal May Put BP's Dividend in the Spotlight

LONDON -- The shares of BP (LSE: BP.L  ) (NYSE: BP  ) fell 3 pence to 448 pence in early trading this morning after the FTSE 100 oil group confirmed it was in "advanced discussions" to sell its 50% stake in TNK-BP to Rosneft.

Weekend reports suggested BP's board had already agreed a $27 billion deal to sell the company's half of the Russian joint venture.

According to Reuters and the Financial Times, BP is expected to receive about $13 billion in cash alongside a 19% stake in Rosneft, which would be worth about $14 billion at the Russian oil group's current share price.

TNK-BP, currently Russia's third-largest oil producer, was established in 2003 when BP merged its Russian assets with those of Alfa Access Renova, a consortium representing the oil interests of various Russian tycoons. Rosneft, which is majority-owned by the Russian government, is seeking to acquire AAR's half of TNK-BP as well.

Announcements confirming the future of TNK-BP could be made later this week, according to reports today.

BP's relationship with AAR has not been easy, with current BP boss Bob Dudley, then chief executive of TNK-BP, claiming to have faced "sustainedharassment" from the Russian authorities during 2008. In addition, an attempt by BP to sell its TNK-BP stake last year was blocked by AAR.

BP's proposed TNK-BP sale follows numerous other disposal announcements from the FTSE 100 group that, since the start of 2010, have totaled some $35 billion.

The sale of the TNK-BP stake could put BP's cash flow and dividend in the spotlight. During 2011, BP's finances were boosted by a $3.7 billion dividend from TNK-BP, and the FTSE major collected a further $14 billion from the joint venture between 2004 and 2010.

In contrast, a 19% stake in Rosneft would deliver a dividend of about $500 million a year, based on the Kremlin-backed firm's current 7.53 ruble per share payout.

BP's dividend currently runs at $0.08 per share per quarter, which will cost BP about $6 billion this year.

Right now, BP offers a 4.5% dividend yield and is just one of a number of FTSE large caps that offers an income well ahead of what you can expect to receive from a standard savings account.

If you are seeking other high-dividend opportunities, this special free report could assist your investment decisions.

"8 Top Dividend Plays Held By Britain's Super Investor" reveals the favorite income stocks held by Neil Woodford -- the City legend who has thrashed the FTSE 100 during the 15 years to 2011 by favoring dividend-paying blue chips.

Just click to download the free Neil Woodford report today. But hurry, this report will remain available for a limited time only.

Are you looking to profit as a long-term investor? "10 Steps To Making A Million In The Market" is the latest Motley Fool guide to help Britain invest. Better. We urge you to read the report today -- while it's still free and available.

Further Motley Fool investment opportunities:

Maynard Paton does not own any share mentioned in this article. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that
considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (2) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 22, 2012, at 5:58 PM, pmz123 wrote:

    Even without TNK-BP, BP will generate over $15B in cash flow which is more than adequate to continue the dividend.

  • Report this Comment On October 23, 2012, at 2:42 AM, InspectorJavert wrote:

    Where do you get $.08/shareper quarter? How about $.48 totaling up to $1.92/year/share. Get the facts straight please.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2069153, ~/Articles/ArticleHandler.aspx, 8/29/2014 10:29:28 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement