BP Is 'Reshaping' Its U.K. North Sea Portfolio by Fun Trading

Summary

BP announced that it sold its interests in the Andrew area in the central UK North Sea and its non-operating interest in the Shearwater field to Prier Oil for $625 million.
Ariel Flores, the head of BP's North Sea, said that the company is "reshaping" its UK North Sea portfolio.
BP is likely to retest $41.25 this week due to the situation in Iraq.

Courtesy: Energy Voice.

Investment Thesis

The London-based BP p.l.c. (BP) is an oil supermajor that fits a long-term investor's perspective. The company is producing cash flow and pays a significant dividend that we can consider reliable.

BP is resilient and has survived many ups and downs. The Macondo disaster happened in 2010, and the extent of the cost related to the catastrophe started to take effect. The total cost so far is about $68 billion.

It will continue to adapt, and I believe it is one of the first oil stocks to be held in any long-term investment portfolio.

A critical issue with this stock is that you have to adopt a strategy that combines a long-term commitment with a regular short-term trading, which could be between one-third and one-half of your total stock position.

The company is amongst my "oil majors" group, which includes Exxon Mobil (XOM), Royal Dutch Shell (RDS.A) (RDS.B), Equinor (EQNR), Total S.A. (TOT), and Chevron (CVX) that I covered on Seeking Alpha regularly. I have also added ConocoPhillips (COP) recently to the group even though it is not a supermajor and is not integrated since the company spun off Phillips 66 (PSX). BP is paying the highest dividend yield as of today.

BP is paying a quarterly dividend of $0.615 or $2.46 per ADR share per year or a yield of 6.24%. Also, the company is buying back shares.

From the third-quarter of 2019 conference call:

Through our share buyback program, we bought back 52 million ordinary shares in the first nine months of 2019 at a cost of $340 million. So far in the fourth quarter, we have purchased a further 18 million shares at a cost of $500 million.

However, if we look at the past five years, this oil stock has largely underperformed the market, if we compared BP to the S&P 500 Trust ETF (SPY) price. It is not specific to BP but to the oil industry in general. Unfortunately, the "expectation" for a long-term investment is quite limited to the dividend.

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