Bp Share Discussion Threads

[prambigear] 06/9/2014 11:41

....mistakes committed wholly by American citizens of course. So O'Barmy "has his foot on the neck of BRITISH Petroleum" for the sins of a few US citizens working for BP.

The legal position is of course that the company takes the rap for the actions of its employees but in spite of the comments to the contrary there is nothing whatsoever in the judgement that goes against BP's claim that their rules and processes were not wrong, simply that employees failed to adhere to them.

[topvest] 05/9/2014 21:30

Yes, to be honest it's amazing how BP has taken all this kicking in it's stride. It would have finished most companies, but not BP. I agree that the UK government should have stepped in to give them some support. They are just taking such a beating for an unfortunate mistake.

[prambigear] 05/9/2014 17:16

Anyway, it is now fact. We know the worst. The share price is down, but recovering. Earnings can cover the possible fines (if we have to), and we no longer have the 'possible' bad news hanging over us. In fact, with appeals, more appeals, and so on From now on 'expected news' is more likely to be about reduced fines, lengthy delays, and so on. So less uncertainty.

[prambigear] 05/9/2014 16:48

But sadly, in law, that ain't the point. The blowout happened and caused damage for which whoever caused it are culpable. The appeared to have been many opportunities to have stopped it, or to have reduced the damage, but that is not an issue in terms of culpability.

(and in any case, read the legal findings, the BP managers don't come well out of the post blowout situation).

[zulu001] 05/9/2014 16:31

Culpable but perhaps not grossly negligent. My point was blowouts are a fairly 'normal' occurrence and if Transocean's toolpushers had been on the ball they should have been able to handle it.

hxxp://www.scribd.com/doc/238671585/BP-Ruling

[prambigear] 05/9/2014 16:25

#84675 zulu,

Read the judge's finding. The issue is not what happened AFTER the blowout, the decision is made regarding THE CAUSE of the blowout. BP's 2 managers DO appear culpable, as Barbier found. Sadly.

[johnmfrancis] 05/9/2014 16:10

doagh. I agree Cameron is a national embarassment and a blundering
buffoon. the terrible thing is that all our mainstream parties are
really all 1 and the same and I cant see any decent leader amongst them.

Why on earth we are still in the European Union is quite beyond me.
It's fairly clear to me why a lot of our politicans want to stay in
as its an endless gravy train for them and their legal profession friends.

keeping the thread more relevant to BP and sorry I am the main culprits
for not doing that I agree seems to me the British government has sweet
sod all to support BP over this affair yet quite happy to extract enormous
tax revenue in all the various guises it dreams up excise duty , vat, corp
tax etc etc etc plus all the emloyment BP gives. BP has been treated
appallingly not just by the USA government but the British one as well.

[zulu001] 05/9/2014 14:33

Interesting. I think the Transocean operators should have been able to handle the blowout as they are relatively frequent occurrences.

[smurfy2001] 05/9/2014 14:05

Surprised with the rise TBH.

[doagh] 05/9/2014 13:58

Who is the enemy Putin or Obama.
Cameron is licking this mans boots and acting like his ventriloquist dummy regarding Russia, but the most harm is being done to this country by America.
No doubt Cameron's eyes are on the potential gain that he will personally make, as Tony Blair is an example of how rich one can become in the service of Uncle Sam. Cameron's only loyalty is to himself.

[prambigear] 05/9/2014 13:42

Having taken the trouble to spend all morning reading the court judgement I am of the opinion that the best BP can hope for (and appeal for) is to shift the balance of blame a little more in their favour.
In my honest judgement of the facts as presented in the long judgement BP WERE responsible for the blowout itself, so therefore guilty.
However, most of the blame for the CONSEQUENCES of the blowout should be laid at the door of Transocean.

Just my opinion, but worth the read for all the things that DIDN'T get reported along the way.

[skinny] 05/9/2014 13:11

BP p.l.c. (the "Company") announces it has today entered into a repurchase mandate agreement with an independent third party to terminate and replace the repurchase mandate agreement entered into and announced on 31 July 2014.

Under the repurchase mandate agreement entered into today, the independent third party will manage the share repurchases for the remaining period of the replaced repurchase mandate agreement through to 12 September 2014.

The independent third party will make its trading decision in relation to the purchase of the Company's securities independently of, and uninfluenced by the Company. On the purchase, the Company's shares will be cancelled.

The purpose of the share buy-backs is to reduce the Company's issued share capital.

Any purchases will be effected within certain pre-set parameters and in accordance with the Company's general authority to repurchase shares granted by its shareholders at the Company's 2014 Annual General Meeting and Chapter 12 of the Listing Rules.

[spob] 05/9/2014 12:29

The hypocrites at Ft Alphaville don't like people copying their stuff onto bulletin boards

The reality is - copying and pasting other peoples work is what they do every day of the week

[spob] 05/9/2014 12:23

FT Alphaville this morn




BE

What else then? Should we retread BP?
BP PLC (BP.:LSE): Last: 459.10, up 4.1 (+0.90%), High: 460.90, Low: 450.30, Volume: 24.19m
PM

Guess so
PM

is it simply that they've got rubbish lawyers?
PM

They seem to lose every single legal battle in the US
PM

Every single one
PM

And Haliburton etc get off scot free
PM

Bizarre
BE

This outcome was always the most likely for BP
BE

Though the timing caught people by surprise.
BE

So you had some alarmist stuff flying around saying: "potential bill $18bn! They've only set aside $3.5bn! Armageddon!" from the sales desks.
BE

When the actual story is slightly more complicated than that.
BE

Citi, for instance, go knive catching this morning.
BE

Raising to Buy — As has been our base-case for some time, BP has been found grossly negligent in the MDL 2179 trial relating to Macondo, the maximum possible outcome. Although this is now a point of high uncertainty for investors, we believe the financial implications of this ruling will remain significantly below the maximum – the Citi estimate is $8.2 B – a sum that should not impact on BP’s ability to fund future growth ambitions nor shareholder dividends (5.2% yield vs. Big Oil at 4.5%). We raise our price target to 510p from 480p and our rating from Neutral to Buy.

BE

Court lays blame on BP — The ruling for Phase 1 of MDL 2179 states that BP is grossly negligent under the Clean Water Act, arguing that BP’s drilling of the well was reckless. BP has already stated an intention to appeal. This will likely delay Phase 3 of the trial (the penalty phase) which is currently set for January 2015. Our base case is that BP will lose on appeal and that gross negligence will stand.

BE

Financial impact delayed — With appeal, financial penalties are unlikely to be known until late 2015 or 2016. The Citi view is that penalties will be significantly below the maximum as the CWA considers corporate attitude and remediation efforts post the spill, an area where we think BP will have excelled in the eyes of the Court. We think this makes CWA penalties likely in c. $5.5 B (30c cents on the dollar of maximum). We peg penalties under the Oil Pollution Act as an additional c. $3.6B, giving a combined undiscounted sum of $9.4 B ($8.2 B discounted).

BE

Valuation — While versus other Big Oil peers BP has issues of somewhat anemic growth and the overhang of Russia, we believe these issues are fairly well compensated in valuation: trading at 0.9x end-17E book and offering an 11% 2018E ROE. A 5.2% yield is higher than peers, although is not fully covered until 2017/18E.

BE

Raising price target to 510p — We raise our price target 510p, mostly on mark-to-market spot GBP/US$ in our US$ DCF. BP’s stake in Rosneft is held in our DCF at current market value. We make no material changes to forecasts.

PM

This is impressive knife catching
PM

Guessing the size of the bill
BE

Seems that Citi's estimate is close to a consensus level among the sellside though.
BE

Which doesn't mean it's correct, only that it's what's expected.
BE

Here's SocGen.
BE

SG view BP rejects the gross negligence charge and will enter the long appeals process.
Assuming the gross negligence charge is upheld, and if we understand the ruling correctly,
BP has been found responsible for 67% of the liability under the Clean Water Act (CWA),
Transocean for 30% and Halliburton 3%. The CWA fine for gross negligence is "up to a
maximum" of $4,300 per barrel spilled (vs $1,100 pb max for simple negligence, the basis
for BP's $3.5bn provision). The number of barrels is not agreed on: BP estimates 3.26 mbbl
versus the US Government at 4.9mbbl - deducting c. 800,000 bbl collected by BP leaves a
range of 2.46mbbl (BP) to 4.1mmbbl (US). Using the government's 4.1mmbbl and 67% of
the maximum penalty (or $2,881 per bbl) yields a potential CWA fine of $11.8bn. Deducting
the existing $3.5bn provision implies an additional $8.3bn liability or 26.7p per share - close
to the actual share price drop yesterday day. The CW Act further specifies that the
maximum should be mitigated by actions taken by BP to stop the leak (so could be below
$8.3bn). The court further ruled that BP is not liable for punitive damages under the Fifth
Circuit precedent but may be liable under the Ninth Circuit. While we cannot estimate
punitive damages and clearly the appeals process will prolong the uncertainty we believe
that it should be within BP's financial capacity without any impact on the dividend.

BE

Also buyers.
BE

Our 550p TP is DCF derived (6.74% WACC, oil prices as shown
below) and includes only half the market value of BP's stake in Rosneft.

BE

Ditto Merrill.
BE

The US District Court has not yet decided on the number of barrels spilled or level
of penalty. By applying the maximum to both we calculate a worst case scenario of
fines of $17.4bn (exceeding existing provisions by ~$14bn or ~10 % of market cap).
This has long been reflected as a worst case ~50p discount to our fundamental
valuation of ~590p. In addition, BP’s current shares we think price in (1) zero value
for its ~20% stake in Rosneft (currently worth greater than $12bn); plus (2) fresh punitive claims worth greater than $13bn. We believe both reflect an overly pessimistic view.

BE

On our calculation and forecasts, BP is in possession of significant balance sheet
headroom. We forecast BP’s gearing at 14% in 2015. Assuming BP’s pre-Macondo
gearing ceiling of 30% would give it greater than $20bn spare capacity to cover any fines in the unrealistic event of near-term cash outflows. As a result, we believe BP’s dividend
policy is not at risk. BP, in our view, also stands out as the only European integrated
oil and gas major covering its dividend outflows with organic free cash flow
generation today. At yesterday’s share price, BP’s dividend yields 5.3% in 2014E.

BE

Roddy -- dunno.
BE

Via Merrill again.
BE

We believe it is as yet unclear if there is any upside risk to claims following the
District court’s decision on BP’s gross negligence. At the end of 2013, BP had an
outstanding US$3.9bn provision under claims and litigation. BP is currently
seeking a review by the US Supreme Court of the Fifth Circuit’s decision on
certain claims that it says have no connection to the Macondo spill case.
Applicability of punitive charges unclear
Under the Fifth Circuit precedent, BP cannot be held liable for punitive charges.
However, it is uncertain if this gross negligence ruling opens up other
avenues/claims for punitive charges to be pursued.

BE

Though Cazenove says punitive is now off the table.
BE

Under General
Maritime Law, the court finds the comparative fault BP 67%, Transocean
30% and Halliburton 3%. However, in light of the US 5th Court precedent, it
concludes that BP is not liable for punitive damages. The Court has not yet
ruled on the number of barrels spilled and no penalty has yet been
determined – it will hold proceedings (scheduled to begin 20 January 2015)
to consider the application of statutory penalty factors in assessing a perbarrel
CWA penalty. The statutory maximum penalty is $1,100/bbl for
simple negligence and $4,300/bbl for gross negligence/willful misconduct.

BE

The DoJ believes the net spill volume was 4.1 mmb; BP is lower at 3.2
mmb. At the maximum fine rate, the potential penalty thus ranges from
$13.9bn ($9.0bn if pro-rated to BP’s original MC 252 65% license interest)
to $17.6bn ($11.4bn if pro-rated). BP carries a balance sheet provision for a
potential CWA fine of $3.5bn.

BE

Also, needless to say, buyers.
BE

This is Fred Lucas, of course, who was probably the best of the sellsiders during Macondo
BE

Our SOTP includes $10bn – Our SOTP at spot FX of 750p per share
includes a post-tax NPV for remaining fines and penalties of $10bn. Every
extra $1bn of incremental post-tax NPV of liability represents 3.3p per
share. Every extra $1bn of cash out flow + provision would raise BP’s
gearing by around 1% (end Q2 net debt $24.4bn, gearing 16%). We note that
at end Q2 BP held cash of $27.5bn. Since we would expect any payments to
be phased over multiple years, we do not expect any further asset sales to
fund the liability. On the same basis, we do not expect the ultimate payment
schedule to impact BP’s capex plans or, crucially, its robust dividend growth
trajectory. In essence, we expect the liability to be funded from BP’s balance
sheet without any strategic disruption.

BE

BP screens very cheap – Prior to this most recent news, BP had generated a
total return (YTD, £) of +3.1% versus RD Shell B +16.0% and the European
sector +9.4%. We attribute all of this underperformance to BP’s exposure to
Russia via its 19.75% Rosneft holding. BP fell 6% yesterday which feels
like an over-reaction to us – most investors that we have been speaking to
seemed to accept our estimated liability of $10bn. We still do not believe
that the post-tax NPV of ultimate payments will be materially higher than
this estimate. We remind that every extra $1bn liability equates to 3.3p and
the stock fell almost 29p or -6%, implying the market fears an incremental
liability of $9bn. We believe the market is failing to adjust for a phased
payment mechanism (the time value of money) or potential tax shelter if
ultimately a settlement comprises a fine under the CWA (not tax deductible)
and payments for natural resource damages (tax deductible). The market’s
reaction also seems to assume that BP’s appeal fails and payments then
begin imminently. Either way, based on our existing forecasts, BP now
screens as a very cheap stock. BP (RD Shell) now trades on a 2014E PER of
8.9x (10.8x), EV/DACF 5.1x (6.9x), PBV 1.0x (1.3x), dividend yield 5.3%
(4.5%), Equity FCF yield incl. known divestments 6.9% (5.3%), and a 40%
(20%) discount to our SOTP.

BE

Is that enough BP?
BE

Is suspect it probably is, for the average reader.

[johnmfrancis] 05/9/2014 11:54

Yees its all on www.gazprom-neft.com . Seems its 95% owned by Gazprom so looks like a subsiduary company. Looks to pay out a decent dividend but share price nowhere near as volatile as parent company. Looks a good long term hold though so will look to pick some up soon.

thanks !!

[skinny] 05/9/2014 11:49

Yes that's the one!

[johnmfrancis] 05/9/2014 11:45

thanks for that Skinny you mean Gazprom Neft OJSC (GAZ) yes I see in my
Hargreaves Lansdown SIPP will allow.

Right will look into it. I had been looking at the Gazprom OAO (OGZD) which
Hargreaves Lansdow SIPP wont allow.

[skinny] 05/9/2014 11:37

You can hold the GAZ ADRs in a SIPP or ISA I believe.

[johnmfrancis] 05/9/2014 11:30

Take a long term view. In My SIPP I have significant stakes in many of the Oil, Gas and Utility dividend payers.

Eg BP, Shell, Total, Exxon, Centrica, SSE, United Utlilities, Chevron, Eon, to name but a few. They all go through periods of price weakness but are all huger revenue earners and always will likely be. I dont intend to sell any of these for a very long time but from time to time look to buy a few more on price weakness. I would also buy Gazprom and Rosneft as well in my SIPP if it was allowed but hold long term spreadbets instead.

They all operate in high risk volatile markets but are also a good long term hedge against inflation. I suspect in 10, 15 years from now we will probably be paying a lot more for our gas, oil, electric, diesal and water so which means all of the above will continue to make a lot of money and pay out dividends for years.

[careful] 05/9/2014 11:10

Comparing BP. with Shell (A+B).
They used to be about the same capital value.
At todays price BP.are worth £84bn, Shell £158bn.

that has been a costly accident.
but compare all other numbers, BP. are dirt cheap.

[skinny] 05/9/2014 10:49

They did Yesterday after the fall.

Date of purchase 4 September 2014
Number of ordinary shares purchased 3,185,000
-----------------
Highest price paid per share (pence) 488.70
-----------------
Lowest price paid per share (pence) 453.95
--------------

[smurfy2001] 05/9/2014 10:47

Will they continue the share buy back?

[mj19] 05/9/2014 10:26

i can't see it really moving loads up for years