NEWS that BP plans to return more cash to investors will be welcomed by shareholders and probably not just for any short term boost to their finances it provides.
The decision to resume share buy backs clearly signals directors’ confidence in BP’s prospects following a difficult few years.
The crude price plunge which started in 2014 only compounded the challenges BP faced following the disastrous Gulf of Mexico oil spill in 2010.
With Brent crude trading above $60 per barrel, against less than $30/bbl in the first quarter of 2016, BP has reasons to be cheerful.
Bosses reckon the company has got itself in shape to prosper with Brent trading at just at $50/bbl, helped by implementing deep cost cuts that have resulted in hundreds of North Sea job losses.
While the company is investing heavily in a slimmed down North Sea portfolio, its efficiency drive has posed challenges across the supply chain in the area.
As many people will have an interest in BP shares through pension funds, the benefits of any increase in payouts to investors will extend well beyond the legions of those who own shares directly.
But any decision to put more cash in shareholders’ hands may raise fresh questions about whether the costs of the downturn have been shared fairly among the various groups with an interest in BP.
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