BP plc (NYSE: BP) is trying to get into full recovery mode after the accident in the Deepwater Horizon nearly two years ago. Along with earnings this morning, BP is raising its dividend. BP group chief executive Bob Dudley discussed returning operational momentum and strong cash flow generation.
2012 is going to be a year of increasing investment and milestones and as it moves through 2013 and 2014 BP expects that financial momentum will build after operating cash flow generated in 2011 reached some $22 billion (60% higher than 2010). Net cash flow in 2014 with oil around $100 would likely be about 50% higher than in 2011.
Dividend and buyback lovers rejoice: Half of the additional cash is expected to be used for re-investment and half for other purposes including increased shareholder distributions and today BP raised its quarterly dividend to $0.08 for the fourth quarter of 2011 as the first rise since BP resumed paying a dividend a year ago. BP has noted that it would settle for teh Gulf of Mexico disaster, but it will not just settle at any cost.
BP’s replacement cost profit was $5.0 billion for the fourth quarter, compared to $4.4 billion a year earlier. For all of 2011 the replacement cost profit was $21.7 billion compared to $20.5 billion for 2010. Operating cash flow in 2011 was $22.2 billion (up 63% from 2010).
Organic capital spending will grow to $22 billion in 2012 versus $19 billion in 2011; Also noted: “During 2010 and 2011 BP received $19.7 billion in receipts from completed divestments and has agreements in place but not yet completed for a further $1.8 billion. As it continues to actively manage its worldwide portfolio of business, focusing the company around a distinctive, high-quality upstream portfolio and a world-class set of downstream businesses, BP plans to continue this divestment programme to $38 billion by the end of 2013.”
BP shares are down almost 2% in the pre-market at $45.97 but keep in mind that the 52-week range is $33.62 to $49.09.
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