The whole world ran on oil for 150 years and oil was far lower. What's your point? In 20-25 years far more cars (maybe 50%) will run on alternate energy anyway. Furthermore, the wealth and income gap has literally stifled all oil use in general and that will not go away anytime soon. The higher oil goes, the more people will simply cut back completely, as we have seen. Couple in the fact of drilling in Canada and the US, and supply will exceed demand for at least 2 decades.
Its well documented that BP has $8 per share in equity tied up in Rosneft. Also, their Rosneft stake contributes 33% or 1/3rd of all revenues BP reports, thus, I am not "pulling numbers out of the air", as I stated, the Russian risk (that Russia may confiscate this stake back) is equal to about 1/3rd of BP's stock value.
Furthermore, an analyst said about 2 months ago that at $51.66 average oil price in 2015, BP would report around $1.30 per share (or something like that), meaning if they pay out the current divs, they would report a loss of over $1, around $1.25 probably or more.
Sorry if you aren't smart enough to read, I am.
So if they don't cut their dividend, then they'll likely lose 1.25 this year, maybe more IDK. Either way, BP isn't even close to fair value yet anyway. The Russian risk is equal to 1/3rd of BP's stock price alone ($8 equity and 33% of all revenues). Not to mention, BP isn't even below $30 yet to reflect low oil.
Wake me up at $25, this is too boring and slow to watch. BP will fall eventually, now or in 6 months makes no difference.
Also, unlike other stocks, BP has a $9 share equity and 33% revs risk in Rosneft, which Russia could steal back any day without warning. BP may be worth $30 without this Russian risk, but its worth $25 with it (or lower.
me too, I fell asleep for the last 45 days watching idiots bid at the highs for something still $10 overvalued at least.
Your problem is that you think the stock will go up if they pay out 2.40 in dividends but only earn $1.10 per year, thus drawing out $1.30 in equity and posting losses per year. Why would any stock go up with losses. As soon as the div is paid out of equity, the stock should fall the equivalent, notwithstanding other issues that haven't been priced into BP yet such as I describe earlier.
No its thanks to BP taking half the money out of equity to pay out dividends. The tiny short ratio that exists on this or any other dividend paying stock is mostly from puts.
BP hasn't reflected oil yet, its still pricing oil at $90 to $100 at the current stock price. If and when BP is priced in all the risks, including oil declines, the Russian confiscation risk, the $13bil fine they still owe, div cut maybe, and losses per share, it will fall to $25.
So your saying earnings falling from 2.40 to 1.20 per year, and shareholder equity being drained by 1.20 to support the current dividend is "priced in"? We are talking about losses per share. What about future asset values falling? What about the Russian risk? The $13bil fine can't be priced in yet, they haven't paid it.
Then look at the books. BP is only worth what it earns and pays out via div. Their books are unimpressive.
today's yield is irrelevant. the stock is 40% overvalued. So it would take you like 6 years at full yield to just break even. Furthermore their Russian risk alone is equal to around $8 or $9 per share, and 33% of all revenues. Further, their fine still needs to be paid, of around $13bil.
Lastly, their oil/gas assets will have to be written down, and also their revs will plummet, causing a possible dividend cut sometime in the future. Right now, the 6.2% yield is being partially paid out of shareholder equity, not out of earnings entirely, going forward.
Fair value is $25. the stock can go to wherever it wants, in the future it will plunge below $28.
When Russia steals back Rosneft, BP keeps incurring losses via paying out div/low oil, and when they pay 14bil to government depleting even more funds, BP will sit at $24.
BP income will fall 65%/70% PRE-div going forward. If you loved it at the 5-year average stock price of $43.50, subtract the $9-$10 per share risk in Russia and discount their current earnings (neg etc), and you get a fair value around $23-$24 at best
That's for LAST quarter with oil averaging $65 or $70. Notwithstanding all BP's terminal problems like the $9 writeoff in Russia probable, and $14bil still owed government, This gives people an idea. BP p/e is probably 28 right now and p/e might be irrelevant because if BP keeps paying divs (out of equity) they will post negative earnings.
My figures might even be too generous. They might earn less pre-div. I'm just quoting analysts that did the math with $51.62 average/barrel. Their earnings drop 50-60% at that figure from the prior year. Take out div and its big losses per year.
Given oil prices where they are, I doubt many of these properties would fetch much at all, unless highly discounted. Either way, selling assets for cash is the same thing, all it does it raise cash, it does not increase equity in fact it could harm equity if sold for a poor price.
HIs figures are obviously silly guesses, and if his dismissal of BP's share price versus current issues plaguing BP speaks volumes. For example, the Russian risk alone.would plunge BP below $30 overnight should it occur "formally", which is a overwhelming likelihood at some point. Maybe next year, maybe this year, who knows.
Not to mention their earings will plunge and if they pay a dividend they will declare big losses. I expect $1.30 earnings with oil at $51.50 average. Paying a div would mean around a NEGATIVE $1.50 earnings for 2015. If oil averages $45 then lookout below.
Not to mention the stock is at 5 year average levels of $40. Its not even down an inch yet.