UPDATE: BP says financial guidance intact despite Rosneft stake exit

(Alliance News) - Oil major BP PLC on Sunday said its decision to exit its near 20% stake in ...

Alliance News 28 February, 2022 | 9:36AM
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(Alliance News) - Oil major BP PLC on Sunday said its decision to exit its near 20% stake in Russia's Rosneft will not harm its ability to increase payouts.

BP said it will sell its 19.75% stake in the oil producer, which it co-owns with the Kremlin, after facing pressure from the UK government.

Chief Executive Bernard Looney is resigning from the Rosneft board with "immediate effect", BP said. Looney was one of two BP-nominated directors, having held the position since 2020. The other is former BP CEO Bob Dudley, who has also resigned.

"Russia's attack on Ukraine is an act of aggression which is having tragic consequences across the region," said BP Chair Helge Lund. "BP has operated in Russia for over 30 years, working with brilliant Russian colleagues. However, this military action represents a fundamental change."

UK Business Secretary Kwasi Kwarteng held a call with Looney for around 20 minutes on Friday to discuss the company's position.

BP said the exit from Rosneft shareholding does not change its distribution guidance and its financial frame guidance remains unchanged. The oil major said it still expects to have capacity for 4% annual increases in dividend through 2025. It also still expects to deliver a 7% to 9% compound annual growth rate in earnings before depreciation and amortisation to 2025, based on oil prices of USD50 to USD60 a barrel.

Brent oil was trading above USD100 a barrel early Monday in London.

BP said it will report a material non-cash charge in its first-quarter results in May, due to the required changed accounting treatment of the Rosneft stake. BP now will need to treat its Rosneft interest as a financial asset at fair value, rather than being able to equity account for its interest.

The charge will be for the difference between the fair value of the holding and its carrying value of USD14 billion. BP also will need to take foreign exchange losses accumulated since 2013 against its income statement. These losses totalled USD11 billion at the end of 2021, the company said.

BP shares were down 6.8% at 352.70 pence in London early Monday. The stock remains up 0.5% so far in 2022 and 19% in the past 12 months.

By Tom Waite; thomaslwaite@alliancenews.com

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
BP PLC 515.00 GBX 0.51

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