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BP's woes are not over by any means; production was down for a sixth quarter in Q4, and a Bloomberg exclusive says its BTC Caspian pipeline has serious corrosion issues that not only represent safety concerns but also further harm its credibility. Q4 oil and gas output was off 5% y/y to 3.82 million bpd, missing analyst estimates. A Citigroup analyst with a Buy rating on BP: "Growth has been a disappointment across the majority of the sector in 2006, and BP is no exception." BP-1yr-chart-01-08-07 A Cantor Fitzgerald analyst voiced concern over credibility, and said "It might be a very brave call to go and take a position (in the stock)." A UBS analyst who has a Buy rating on BP points out the firm's struggles compared to rivals such as Exxon, and says BP has "significant upside" potential as a "recovery stock" if it has a "sustained period of more sure-footed performance both operationally and managerially." Reuters highlights concerns over Russia, where output at a JV fell sharply due to oil field sales. Two positive notes are lower expected taxes, 25% vs. 33% in '05, and higher y/y profits in Q4 due to higher comparable oil prices.

• Sources: Bloomberg [I, II], BP Q4 Trading Update, Reuters
• Related commentary: BP Under Investigation -- Again, Fuel For Thought: Which Integrated Oil Company Should You Own?, BP's Budget Cuts and Ignored Warnings May Have Played Role in Explosion, BP's Earnings Slow
• Potentially impacted stocks and ETFs: BP Plc (NYSE:BP). Competitors: Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), Royal Dutch Shell (NYSE:RDS.A), Total SA (NYSE:TOT). ETFs: United States Oil Fund ETF (NYSEARCA:USO), Vanguard Energy (NYSEARCA:VDE), BLDRS Europe 100 ADR Index (NASDAQ:ADRU)

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