On Friday is was announced that supermajor oil company BP plc (BP) has approved a $8 billion share buyback plan following the completion of a major deal to sell its stake in TNK-BP to Russian oil giant Rosneft.
In 2003 BP invested $8 billion to form the join-venture TNK-BP, a Russian oil company, and received $19 billion in dividends over the next decade. Now that it has hold off its 50% stake in the company, BP wants to return that original $8 billion investment to shareholders .
BP sold its interest in TNK-BP to Rosneft, Russia’s largest oil company, for a total of $12.48 billion cash plus shares of Rosneft. BP now holds a 19.75% stake in Rosneft.
“We expect our stake in Rosneft will generate long-term value for BP and its shareholders,” said BP Chairman Carl-Henric Svanberg. “But this buy-back program should also allow our shareholders to see benefits in the near-term from the value we have realized by reshaping our Russian business.”
BP is expected to complete the share buyback plan over the next 12 to 18 months. The remaining $4.48 billion in cash received from the deal will be used to reduce the company’s debt.
BP shares were up $1.15, or +2.81%, during pre-market trading on Friday. The stock is down -12.68% over the past year.
The Bottom Line
Shares of BP (BP) have a dividend yield of 5.28% based on last night’s closing price of $40.89 and the company’s annualized dividend payout of $2.16 per share.
BP plc (BP) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.