Will Russian Sanctions Affect BP?

There are two potential headwinds that could surface for the BP story: its exposure to Russia via its Rosneft stake and the potential for weakening U.S. crude differentials

Stephen Simko, CFA 2 May, 2014 | 9:51AM
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BP's (BP.) shares have traded up since announcing strong first-quarter results and a 3% dividend increase (it was raised 6% just two quarters ago). These lend support to our thesis that BP's legal liabilities appear unlikely to impair the company's ambitions to use its growing operating cash flows to increase its dividend in future years.

There are, however, two potential near-term headwinds that could surface for the BP story: its exposure to Russia via its Rosneft stake and the potential for weakening U.S. crude differentials. This report reviews the potential impact of each, and concludes that neither is likely to have a meaningful impact on the company's long-term outlook or valuation. We continue to view BP favourably at current share prices and it remains our preferred oil major.

How Important Is Russia to BP's Valuation and Cash Flow?

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BP PLC304.65 GBX-0.42Rating

About Author

Stephen Simko, CFA  is a senior stock analyst at Morningstar.

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