BP to buy back eight billion dollars worth of shares

FTSE 100 oil and gas producer BP intends to carry out a share repurchase programme with a total value of eight billion dollars.

FTSE 100 oil and gas producer BP intends to carry out a share repurchase programme with a total value of eight billion dollars.

The decision to buy-back shares follows the completion on March 21st of the sale of BP's 50% interest in TNK-BP to Russian oil company Rosneft. The programme is expected to return to BP shareholders an amount equivalent to the value of the company's original investment in TNK-BP.

In 2003, BP invested around $8.0bn in cash, shares and assets in the formation of TNK-BP. Over the following decade, BP received a total of $19bn in dividends from the joint venture.

BP sold its interest in TNK-BP to Rosneft, followed by a reinvestment in Rosneft shares for an overall consideration of $12.48bn in cash, including $0.71bn in TNK-BP dividends received by BP in December 2012, together with shares representing 18.5% of Rosneft.

As a result BP now holds a 19.75% interest in Rosneft.

Bob Dudley, BP Group Chief Executive, said: "BP is moving on to the next phase of its business in Russia, becoming the largest private shareholder in Rosneft, Russia's leading oil company. In the process we have also released cash, equivalent to at least six years of BP's anticipated future dividends from TNK-BP. We look forward now to working closely with Rosneft and together developing opportunities to create value for both companies."

Dudley said that the size of the proposed buy-back programme, which is expected to exceed that required to offset the earnings per share dilution expected as a result of the sale of TNK-BP, also reflected the reduction in BP's asset base following its $38bn divestment programme over the past three years.

BP intends to retain the additional cash consideration of $4.48bn received from the sale of its interest in TNK-BP to reduce BP Group debt as part of its continuing commitment to maintaining a strong balance sheet.

MF

Recommended

Share tips of the week – 9 December
Share tips

Share tips of the week – 9 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
9 Dec 2022
The top funds to invest in now
Funds

The top funds to invest in now

As market volatility continues, here are the top funds, stocks and investment trusts investors are putting their money into, according to one investme…
2 Dec 2022
7 sin stocks to buy yielding up to 8%!
Share tips

7 sin stocks to buy yielding up to 8%!

Sin stocks don’t have the best reputation, but when it comes to investment returns, they’re certainly worth a closer look.
2 Dec 2022
Share tips of the week – 2 December
Share tips

Share tips of the week – 2 December

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
2 Dec 2022

Most Popular

Is it cheaper to leave the heating on low all day?
Personal finance

Is it cheaper to leave the heating on low all day?

The weather is getting colder and energy bills are rising, but is it really cheaper to leave the heating on low all day or should you only turn it on …
1 Dec 2022
Radiator vs electric heater – which is cheaper?
Personal finance

Radiator vs electric heater – which is cheaper?

We compare the costs, pros and cons of radiators and electric heaters and see which one will help keep your energy bill as low as possible.
28 Nov 2022
The pros and cons of smart meters – should you switch?
Personal finance

The pros and cons of smart meters – should you switch?

A smart meter can help you keep tabs on your energy usage, but is it better than a regular meter? We take a look at smart meters vs regular meters.
2 Dec 2022