BP plc (ADR) (BP), Royal Dutch Shell plc (ADR) (RDS.A): What Makes This European Oil Major A Buy?

Although BP’s future in North America looks challenging — after the U.S Environmental Protection Agency’s decision to suspend the energy giant’s ability to win new federal government contracts — but it has been making significant progress in the emerging markets .

Source: BP Company Presentation

BP also has a 19.75% stake in the Russian energy behemoth Rosneft. The growth of Rosneft will help boost BP’s production, last quarter collection 945 thousand barrels of oil equivalent per day, and would open a new income stream through dividends from Rosneft.

BP has made a major gas discovery in India’s KG-D6 deepwater block, the details of which will be released once the exploration and research work is complete and this follows the progress in Brazil where the company has been awarded eight new deepwater blocks in the last licensing round .

Also BP has started two big upstream projects in 2013; the Atlantis North Expansion and the Angola LNG projects. Besides these, four other major upstream projects will also start later this year . The company is currently working on 11 wells and will complete the exploration work on 15 to 20 wells by the end of the year .

Conclusion
In terms of valuation, BP looks attractive. It is currently trading at 1.4 times tangible book value and has positioning itself for long term growth, something other large integrated majors have not. Management’s effectiveness is evident in its ability to generate a healthy return on equity of 21.4%, which is considerably higher than the industry’s average of 13% .

The article What Makes This European Oil Major A Buy? originally appeared on Fool.com and is written by Sarfaraz Khan.

Sarfaraz Khan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.