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.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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.

Advertisement
Advertisement - Article continues below

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

Advertisement

Recommended

Visit/investments/investment-strategy/600861/how-demographics-affects-stock-valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Visit/investments/stocks-and-shares/600863/sirius-minerals-anglo-american-takeover
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Visit/investments/stockmarkets/600634/why-investors-should-be-cautiously-bullish-for-2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020
Visit/investments/stocks-and-shares/share-tips/600636/class-acts-going-cheap-buy-into-europes-best
Share tips

Class acts going cheap: buy into Europe’s best bargains

Value investing appears to be making a comeback, while shares on this side of the Atlantic are more appealing on metrics such as price/earnings ratios…
16 Jan 2020

Most Popular

Visit/investments/commodities/gold/600998/extraordinary-times-buy-gold-buy-silver
Gold

Extraordinary times create extraordinary opportunities – these assets look cheap

With the stage set for some monumental fiscal stimulus, this is most definitely a time to own some gold. And if you’re bold enough, says Dominic Frisb…
18 Mar 2020
Visit/investments/bonds/government-bonds/601026/corona-crisis-will-end-bond-bull-market
Government bonds

The corona crisis will mark the end of the longest-running trend in markets

With politicians and central bankers enthusiastically embracing money printing and a recession almost certainly not too far off, the slide in bond yie…
20 Mar 2020
Visit/currencies/601015/the-us-dollar-standard-is-now-suffocating-the-global-economy
Currencies

How the US dollar standard is now suffocating the global economy

In times of crisis, everyone wants cash. But not just any cash – they want the US dollar. John Stepek explains why the rush for dollars is putting a b…
19 Mar 2020
Visit/investments/commodities/600729/the-rare-earth-metal-that-wont-be-a-secret-for-long
Sponsored

The rare earth metal that won't be a secret for long

SPONSORED CONTENT – You can’t keep a good thing hidden forever; now is the time to consider Pensana Rare Earths and the rare earth metals NdPr.
31 Jan 2020