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RPT-ANALYSIS-Catch-up time as BP eyes closure on Russia, spill

Company Market cap Historic EV/EBI EV/FC EARNINGS in $ blns PE DA QUALITY* Exxon 416 10.06 4.62 23.15 90 Shell 218 7.33 4.51 21.87 N/A Chevron 215 7.92 3.33 27.70 64 BP 135 5.33 3.21 17.90 27 Total SA 122 7.26 3.22 N/A 38

Data from Thomson Reuters Eikon/analysts reports

SHADOW OF THE SPILL The core reasons for a BP stock market value 'discount', which analysts put in the tens of billions of dollars, are the Russian uncertainties and the looming shadow of potential liabilities for the 2010 U.S. Gulf oil spill. After months of growing expectations that U.S. authorities were moving towards a settlement, in August the Department of Justice made a court filing re-asserting its case for gross negligence with regard to the accident. Such a finding could cost BP $21 billion under the United States' Clean Water Act, based on a maximum fine of $4,300 per barrel spilled tied to a 4.9 million-barrel estimate of the total that spewed into the sea. BP has already spent $14 billion on clean-up operations and paid out over $8 billion in claims. It is offering a further $7.8 billion in settlement to individuals and businesses affected by the disaster on top of all the other costs. It plans to contest a gross negligence charge at a hearing due to start in January. A fairness hearing on the proposed $7.8 billion settlement for individuals and businesses is due on Nov. 8. BP has made good progress selling a raft of assets so that it can shoulder a big hit, having raised to date some $35 billion towards a goal of $38 billion from divestments. In the process, it has expunged another blot on its U.S. safety reputation - the accident-prone Texas City refinery, selling it to Marathon Petroleum earlier in October. So financially, BP has the makings of a new start, in the United States, Russia and elsewhere. ''Our strategy targets higher cashflow; we expect to increase operating cashflow by 50 percent from 2011 to 2014 (in a $100 oil price environment),`` BP said in an emailed statement. But it is not all about money. The spill and the Russian issues have taken management time that might have been focused on the business itself. And the spill has tarnished BP's reputation in a core producing country.

TO-DO LIST On Dudley's to-do list now are production problems in Azerbaijan, where the company is trying to mollify a government angry about falling output. Last week he juggled face time with Rosneft boss Igor Sechin and Rovnag Adbullayev, the president of the Azerbaijan state oil company SOCAR. Then there is Rumaila in southern Iraq, the biggest of the country's producing oilfields. BP has the pick of the bunch of service contracts, but it no longer looks like the most alluring business in post-war Iraq. Rivals who followed it in are having second thoughts, heading north to the autonomous Iraqi Kurdistan for richer pickings and some ownership of the production itself, to the fury of the Baghdad government. On a smaller scale, BP's one-year-old Indian projects are in the doldrums. Partner Reliance Industries is considering shutting underperforming gas fields. BP also has issues in Norway, where its Skarv project is months behind schedule. These troubles are the normal stuff of the international oil business, of course. And BP is not alone in suffering from increasing competition for assets from cash-rich national oil companies and for industry project ''action`` from the increasingly influential oil services sector.

NO EASY RIDE And BP's rivals have their own crosses to bear; witness Shell's embarrassing stutter in the Arctic as winter closes in, with $5 billion spent and barely a hole drilled, and Exxon's expensive 2010 acquisition of shale gas producer XTO Energy just before gas prices hit the skids. All the big guns of the industry are struggling for a toe-hold in some of the newest and hottest provinces of east Africa and offshore Brazil. But BP lacks Exxon's scale, and without TNK-BP, which used to pay out rich dividends, it could do with a cash cow like Shell's GTL plant in Qatar to feed its exploration and acquisition budget. On a longer term strategic level, BP is seen as slipping behind in the race to develop liquefied natural gas (LNG) projects. LNG projects - expensive, complex and risky, like the U.S. Arctic offshore where BP is also conspicuously absent - are among the few areas where the supermajors can still flex their muscles. Sets of data produced by rivals Royal Dutch/Shell and BG shows BP dropping from third to sixth place by 2017 among the big corporate players in terms of LNG projects onstream or under construction. The data shows BP with barely an extra million tonnes a year of new output in its portfolio by then, compared with roughly an extra 15 million for Chevron and 7 or 8 million each for BG and Shell, mainly thanks to that trio's huge projects in Australia.

''We've set out our strategy to 2014 - focusing the company around our strengths, the things we do well - and are making good progress on it,`` said BP in its statement. ''These strengths include exploration, operating in the deep water, developing gas value chains from production to market, and developing and managing giant fields. And looking for valuable barrels rather than simple volumes. Between 2012 and 2014 we expect to bring 15 new major upstream projects on stream that have margins double that of our 2011 portfolio average.`` All music to investors' ears, but some of its rivals have a head start, and they won't be standing still.

(Reporting by Andrew Callus; Editing by Will Waterman)