British energy giant, BP today cheered investors with a 12.5 per cent hike to its quarterly dividend after an expected fall in profit turned out to be less severe than what had been projected by analysts.
According to the energy company, whose stock is held widely by retail investors and pension funds, payouts would now be 9 per cent, or 5.6p per share. Shares rose over 3 per cent to 440 p today on the news.
BP, accounting for one pound in every six invested by pension schemes, posted a fall in profits after one-off items and movements in the oil price to £3.2 billion, from £3.4 billion in the same quarter last year.
However, the dividend increase also came with the downside of lower future oil output projections after the deal to sell part of it's stake in TNK-BP.
Investors have been calling for extra dividends to reflect the sale of BP's stake in the Russian oil venture TNK-BP. Last week, Kremlin-backed Rosneft agreed to acquire BP's 50 per cent stake in TNK-BP for £10.7 billion in cash and £6 billion worth of Rosneft shares (See: Rosneft to buy TNK-BP stake from BP, AAR in $54.7-bn deal).
The dividend rise today, however, does not relate to TNK-BP. The company did not clarify how its investors stood to benefit from the deal, which left BP with a 19.75 per cent stake in Rosneft, now the biggest publicly traded oil company in the world.
The sale would however mean that BP would see it's production levels fall. The Russian venture contributed to 31 per cent of BP's production in the third quarter and even excluding TNK-BP, BP's production slid 3 per cent to 2.26 million barrels of oil a day in the period.
However, according to chief executive Bob Dudley, the results showed 'strong progress'.