Is BP plc (ADR) (BP) Recovering?

BP is also offering a relatively high dividend yield of 4.92%. In comparison, Shell is offering a slightly higher yield of 5.16% and Exxon offers an annual yield of only 2.57%.

During 2012, the price of oil (WTI) declined by nearly 7.1%. All things being equal, this could suggest the company’s profitability and total revenues were adversely affected by the fall in oil prices during 2012.

Alternatively, the natural gas prices rose during 2012 by almost 5.9%. The rise in natural gas prices may have curbed some of the fall in the company’s revenues. Nonetheless, since the share of natural gas revenues out of BP’s total revenues in the upstream operations account for only 10%, the rise in natural gas prices have had little effect on the company’s total revenues growth. Currently, it seems that natural gas won’t tumble to its low prices recorded during the first half of 2012, but the price is expected to remain low compared to the five year average.

I still hold the opinion that BP will keep recovering and investors will slowly come back to this company. The company’s high dividend yield and its positive free cash flow are among the company’s strong points. BP still has a long way to go until it will be out of the woods completely. In the coming months, as the civil trial will enfold it will become clearer if this company will need to raise more cash for a settlement. In any case, it seems that the worst for BP is over.

For further Reading:

Will BP make a Comeback?

Will Natural Gas Fall to $2?

The author holds no positions in stocks mentioned and does not plan to initiate positions within 120 hours of the posting of this article. This article is to be used for educational, research and informational purposes only and does not constitute investment advice. There are no guarantees, expressed or implied, of future positive returns in regards to the subject matter contained herein. Understand the risks inherent in investing before making the decision to invest or consult an investment professional for more information. Reasonable due diligence has been performed in regards to the information in this article. However, the author expressly disclaims any liability for accidental omissions of information or errors in fact.

The article Is This Oil Company Recovering? originally appeared on Fool.com and is written by Lior Cohen.

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