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The 2013 Outlook for BP

G. A. Chester
December 31, 2012

LONDON -- In this festive mini-series, we look at the 2013 prospects for some of your favorite FTSE 100 (UKX) shares. Today, it's the turn of BP (LSE: BP) (NYSE: BP).

BP's shares have lost 8% during the course of 2012, in line with the oil and gas sector average. Meanwhile, the Footsie has gained 6%.

If markets don't like uncertainty, and keep a company's share price depressed because of it, I'm a little surprised BP's shares haven't performed better this year seeing as positive newsflow in two major areas has removed some of the uncertainty that prevailed at the start of 2012.

In October, BP announced it had signed heads of terms to sell its share of the troubled TNK-BP partnership in Russia to state-owned Rosneft. Rosneft will also be buying the other half of TNK-BP. The deal, which should complete in the first half of 2013, will see BP end up with over $12 billion in cash and a 20% equity stake in Rosneft.

BP's determination to have a substantial and long-term interest in Russia remains a fairly high-risk strategy, but climbing out of bed with the oligarchs of TNK-BP and into bed with the Russian state looks like the lesser of two evils.

An even bigger issue for BP going into 2012 was, of course, the continuing legacy