According to an old equity-market adage, January sets the tone for the year. After the worst January in years, the beginning of February was nothing to write home about, with stocks slipping again mid-week as oil headed back to 12-year lows. The renewed wobble in crude was accompanied by a 10% slide in BP's shares as it announced its full-year figures for 2015.
BP suffered its worst-ever annual loss of $5.2bn. The dividend yield jumped to over 8%. It announced 3,000 job cuts, on top of 4,000 already made, while CEO Robert Dudley predicted oil prices would recover this year: "It's lower for longer, not lower forever."
What the commentators said
Each $10 drop in the oil price costs around $2.1bn of operating cash flow a year. "It is hard to cut fast enough or deep enough to keep up." Despite the huge losses and higher debts, Dudley plans to keep the dividend at last year's level, said Jim Armitage in the Evening Standard.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Perhaps he picked up the Russians' love of gambling while he was there running BP's joint venture with TNK. But his dividend plan is essentially a bet on the oil price recovering soon "the kind of wager even the most feckless count in Tolstoy would balk at".
Actually, he can probably keep up the payout for another year, even if oil stays where it is, reckoned Alistair Osborne in The Times. Capital expenditure is being slashed from $23bn in 2014 to $17bn this year. By the end of next year $7bn of costs will have gone. And while debt has gone up, it's still relatively low.
BP can afford to wait, agreed The Guardian's Nils Pratley. But there's a "deeper worry" than the dividend. Could all this retrenchment damage BP's ability to exploit the next upturn in oil prices?
-
Christmas at Chatsworth: review of The Cavendish Hotel at BaslowMoneyWeek Travel Matthew Partridge gets into the festive spirit at The Cavendish Hotel at Baslow and the Christmas market at Chatsworth
-
Tycoon Truong My Lan on death row over world’s biggest bank fraudProperty tycoon Truong My Lan has been found guilty of a corruption scandal that dwarfs Malaysia’s 1MDB fraud and Sam Bankman-Fried’s crypto scam
-
As oil prices surge, should you buy BP shares?Analysis The imbalance between supply and demand has sent the oil price surging, bringing bumper profits to oil giant BP. Rupert Hargreaves looks at the numbers and asks if BP shares deserve a place in your portfolio.
-
Should you be worried about energy windfall tax proposals?Analysis Calls have been growing for a windfall tax on UK oil and gas producers. It's a popular idea, but is it a good one? And what does it mean for investors in the UK's energy companies? Rupert Hargreaves explains.
-
BP’s profits surge, but the company’s growth is far from guaranteedAnalysis BP profits are at their highest in a decade, and it looks to be a business firing on all cylinders. But its future is far from certain, says Rupert Hargreaves.
-
BP: really going “beyond petroleum” won't be easyNews BP is recovering and plans to become carbon neutral by 2050. Meanwhile, activist investors are targeting ExxonMobil. Matthew Partridge reports
-
BP looks set to return more money to shareholders as it beats expectationsNews Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfolio.
-
BP has slashed its dividend – and markets love itOpinion BP has bowed to the inevitable and cut its dividend in half – and its share price promptly rose. John Stepek explains what it means for shareholders and for beleaguered income investors.
-
BP bows to reality as it writes down $17bn of assetsNews The oil giant has ditched its conspicuously bullish outlook and written down the value of its assets. Will it cut its dividend too? Matthew Partridge reports
-
Watch out income investors – BP looks likely to cut its dividend in the near futureOpinion Oil major BP is writing billions off the value of its assets as it struggles to adapt to the changing world. Unlike Shell, however, BP hasn’t yet cut its dividend. But, says John Stepek, it’s only a matter of time till it does.
