The underlying picture at BP is cheerier than it first appears, but questions remain about the oil group’s dividend
For a while yesterday it looked as if the market was going to damn BPs results with faint praise. Analysts chose to fret about the Q4 loss a consequence of the falling oil price and a colossal tax bill in Russia until a soothing lunchtime conference call sparked a modest rally in the share price.
This was a reasonable response, for at least one of those factors is only short term. The tax hit was due entirely to booming crude prices earlier in the year, but future bills will not be so lumpy, since Russias tax authorities now plan to determine the rate on a monthly, rather than a quarterly, basis.
The outlook for crude prices is rather more problematic, with little hope of a recovery in 2009, in spite of some signs that demand may not fall much further and the fact that Opec is sure to keep a tight grip on supply in coming months.
The underlying picture, those factors BP can influence, is cheerier. Production in the last three months of 2008 was the best since the second quarter of 2006 with the Texas City refinery running again and the Thunder Horse platform in the Gulf of Mexico going well. Likewise, BP had a good 2008 in terms of exploration, while 2009 will also see all reserves replaced. The company also has a lower breakeven crude price than rivals, whom it outpaced in cutting costs heading into this downturn.
Despite all this, BP shares still trade at a big discount to those of Royal Dutch Shell, which must cause Tony Hayward, chief executive, concern. Here we come back to crude prices. The market doubts whether, if crude remains this low, the dividend is sustainable. BP is sufficiently lightly geared for this not to be a problem, but investors with long memories recall it remains the most recent oil major to cut its dividend albeit back in the recession of 1992.
Mr Haywards predecessor, Lord Browne of Madingley, was frequently castigated by small investors for paying BPs dividends in dollars, particularly in 2002, when the pounds strength against the greenback meant the payout, while rising in dollar terms, actually fell in sterling terms.
Today the strength of the dollar means that, in sterling terms, BP shares offer a prospective yield of more than 8 per cent. Assuming that the payout is held this year, which looks likely, that makes them a roaring buy.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
MORE DETAILS:
A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
