RE: BP / Rosneft25 Feb 2022 03:20
Analyst's views on BP / Rosneft
The fall in BP shares contrasted with a rise in most other oil stocks as the price of crude surged above $100 a barrel for the first time since 2014.
However Biraj Borkhataria, analyst at RBC Capital Markets, said: “From a cash flow perspective, [BP’s] exposure is limited. The Rosneft dividend accounts for 5 per cent of cash flow and this is offset by a $5 per barrel change in oil prices, which we’ve seen in a matter of two days.”
He added: “The market never really gives credit to the Rosneft stake for BP as investors seem to take the view that it’s a nice dividend stream but will be difficult to monetise the actual holding for fair value. Clearly the current situation makes things even more difficult.”
Oswald Clint, analyst at Bernstein Research, agreed that any impact on BP’s cash flows from Russia would “be offset by the higher commodity prices elsewhere in the portfolio”.
He contrasted BP with credit card and luxury goods businesses that derived revenues from Russia. “Question is, do we need low-cost oil and gas to power our homes or do we need to buy that next luxury item or add that next unnecessary item to the credit card? Therefore singling out an energy company as the bad guy having an untenable position in Russia when it’s a commercial enterprise not involved in politics is not the answer here,” he argued.
Asked earlier this month if he would exit Rosneft if Russia invaded Ukraine, Looney told The Times: “Russia is a big part of the global energy mix, it’s a member of Opec+, it provides energy to Europe. We, along with many of our peers, have a business in Russia, we’ve been there over 30 years. I’m not going to speculate on what might or might not happen, but only to rest assured that whatever, if something happens, and if there are sanctions or whatever, then obviously we will comply with them.”
A BP spokesman said it was monitoring the situation
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