The company’s recent performance was not up to the standards of the John Browne we admired when we first met him a few decades ago. As the chief executive leaves, BP retains a rich suite of energy assets that we estimate are worth $80 a share in net present value.
Mr. Tony Hayward, designated by the board of directors to be the new chief executive on August 1, currently is responsible for the exploration and production operations that account for 70% of the company’s value. Adverse publicity continued to build before the latest announcement, including a feature story by Bloomberg about potential failure of welded joints in the newly constructed BTC, for Baku, Tblisi, Ceyhan, pipeline from Azerbaijan across Turkey to the Mediterranean.
Stock price below the 200-day average confirms that BP stock remains out of favor with investors. With patience, we include BP stock at a half weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean energy to support global growth.
BP 1-yr chart