Will a 'stronger, better' BP be a top dividend payer again?

Nerves of steel are what I have! Long-term value is what it's all about.

No one who cares about the future should hold this share. Big oil's days are over. Not a moment too soon. Goodbye BP - you will not be missed.

So Big Oil's days are over? Ever since I started working in the early 70's people have said that there is only 30 years oil left. I now have a geologist son who points out that there is absolutely no shortage of oil, there is enough for centuries to come, it's just that the easier oil has been found and as the price goes up then it's worth extracting the more difficult stuff. The result is that the revenues and profits will increase. Unless you think that the world will stop using il in the next 50 years or so?

While the production of alternative energy is so expensive and the americans wont put their fuel prices up there will be a huge need for oil

I agree that oil shortages may help Big Oil profits but it is increasiongly recognised that there will be a shortage as even the international Energy Agency now admits : "In a break from the IEA's typically optimistic projections, Dr Fatih Birol, chief economist at the agency, told The Independent newspaper that global oil production was now likely to peak within 10 years and that governments were woefully under-prepared for such an eventuality.

According to an assessment of more than 800 oil fields undertaken by the IEA, the average rate of decline in oil production is now running at 6.7 per cent a year, significantly worse than the official estimate of 3.7 per cent released in 2007.

Dr Birol told The Independent that the world should be acting now to prepare for oil supplies peaking, a scenario that is likely to lead to a rapid increase in oil prices."

The New York TImes is reporting that the gulf oil slick is disappearing fast and that the environmental damage is less than feared. There is almost no new coastal damage and bacteria that feeds on natural oil seeps in the gulf is clearing the oil.

So maybe Haywood was right about the dilution and lack of environmental impact and Obama has just gone over the top.

Does this mean that BP payouts will be less? I would guess that Obama will still want to milk BP to cover his own poor financial decisions in this crisis.

The problem going forward for the oil industry in general and BP in particular will be obtaining licences for future exploration. The following reasons suggest to me that there will be fewer permits granted. (1) There are a dwindling number of areas world-wide where prospects are sufficiently good to warrant upstream infrastucture costs. (2) As a result of the G.O.M. oil spill much more stringent regulations and inspection procedures will be enforced. (3) Governments and exploration companies who have already identified prospective, and probable reserves will now place a greater value on these assets. (4) There will be a surge of campaigns by greenpeace and other environmental lobbyists and protestors. (5) If the recovery in world markets and future economic growth remains sluggish then demand can be met from existing supply. (6) If BP sells some of its productive oil fields it will strengthen the hand of the companies (Its competitors) who have acquired them, who will in turn be in a more favourable position to be replace its resource. (7) We don't know yet what the extent of retrospective action by the U.S. administration and other governments will be. It is highly likely that some licences will be revoked, and not just those that are held by BP.

BP may be able to resist a takeover bid for a while, but my opinion is that it will need to find a partner with impeccable credentials if it is retain its position of dominance.

Is it possible that the final cost will be (much?) less than is currently being provided for?

As I understand it, BP has agreed to pay $20 billion into an escrow account that will be administered by a US attorney and used to meet compensation claims.

How is this meant to work? Who decides if a claim is justified and, if so, what fair compensation would be?

And, if money is not going to be handed out from this fund willy nilly, what are the chances of a surpluys from the fund eventually being return to BP when all the claims have either been settled or rejected?

Finally, what about the US subcontractors who were also involved? Will they not have to meet their share of these claims?

Or am I just being too optimistic?

@Dennis:

You are correct, the planet is awash in oil (literally, in the case of the Gulf of Mexico and Nigeria). Equally, Martin Roach's assertion that there will be shortages is also true.

This is a result of short-sighted development policies during the past 3-4 decades. Reluctance to spend money in extraction infrastructure in secondary producers has resulted in localisation in areas that are now not regarded as politically stable and subject to sanctions. The demand from emerging economies will cause supply shortages until the new 2nd tier suppliers can come onstream.

@Ivor

Of course the US owners of the rig and the US builders of the well-head (Halliburton) will be pilloried in just the same fashion as the lessee (BP). I am equally sure that Rumsfeld and his cronies will not be lobbying and paying "re-election contributions" to all and sundry as it is illegal under Obama's amendments, isn't it??

BP are guaranteed a fair and equinanimous verdict if they counter-sue the US companies; obvious, top-hole, no question.....

For holders of BP shares, thre is the possibility that summer storms will set back work to close the leak and there is the open ended nature of claims. But then again, the company has seen its capitalisation drop by 90b, but has reckoned on 20 to 30 b to deal with claims.

Dividen paymnes seem likely to resume late this year and the sale factors and this would indicate a valuation of 450p at year end.