* Shares up more than 4 pct
* Investors welcome dividend hike, asset sales, lid on capex
* Refining result worse than last year, as expected
By Andrew Callus
LONDON, Oct 29 BP Plc kicked off the
results season for top global oil firms on Tuesday with
forecast-beating profits and a dose of what the industry's
investors want - a dividend hike, plans for asset sales, and a
promise to keep a lid on spending.
The world No. 5 among investor-controlled oil and gas groups
worldwide scaled back its guidance on capital spending next year
to $24-$25 billion compared with previous guidance of $24-$27
billion for the years up to 2020.
BP also raised its quarterly dividend by 5.6 percent to 9.5
cents a share and said it would sell $10 billion of assets over
the next two years, returning most of the proceeds to
shareholders - a higher rate of disposals than previously
promised under a programme aimed at jettisoning $2 to $3 billion
dollars worth of assets per year until 2020.
Shareholders throughout the sector have been worried that
rising costs will allow spending to balloon, crimping cash flow
should oil prices drop, and reducing the industry's ability to
offer them returns. They want spending controlled and spare cash
siphoned back into their pockets.
"The stockmarket doesn't want the oil majors to spend money.
Instead, investors want their cash back. And BP has obliged this
morning," said analyst Neill Morton of Investec, who noted that
the share prices of Europe's integrated oil firms as a multiple
of their earnings stand at a 20-year low relative to the broader
BP shares climbed 4.8 percent to 473 pence after the
results, supporting other stocks in the sector. Exxon Mobil
, Chevron, Royal Dutch/Shell and Total
report results later this week.
BP's underlying replacement cost net profit for the third
quarter of 2013 was $3.692 billion compared with a
company-supplied consensus analyst forecast of $3.170 billion.
The figure was sharply lower than the $5.017 billion a year
earlier - mainly because of much weaker refining margins,
divestment of refineries and reduced income from its Russian
business, but it was more than the second quarter's $2.712
billion when a big Russian tax charge hit the bottom line.
Rosneft, the state-controlled Russian company into
which BP folded its Russian business last year in exchange for a
19.75 percent stake, delivered $808 million of the profits. It
also reported quarterly results on Tuesday.
BP has already sold $38 billion of assets - mainly to pay
for the 2010 Gulf of Mexico oil spill of 2010 - but asset sales
have become a theme throughout the sector as it struggles with
rising costs and eyes potentially lower oil prices in future.
Most of the top oil companies have been making noises this
year about "active portfolio management" and "value over
BP recently won a small victory in its sea of legal defeats
over the oil spill and to reflect that, it derecognised about
$400 million of provisions within the $20 billion fund it has
set aside for certain types of compensation.
However, it raised slightly its overall cumulative charge
for the costs of clean-up, fines, and compensation for the spill
to $42.5 billion from $42.4 billion due to other small extra