Some Big Oil Getting Bigger and Better

Includes: BP, RDS.A, STO, TOT, XOM
by: Michael Fitzsimmons

BP (NYSE:BP) and Royal Dutch Shell (NYSE:RDS.A) blew past earnings estimates and both got a nice pop on today's open.

BP earned $7.6 billion vs $4.66 billion. As most other large integrated oil companies, BP's production growth stalled at 3.91 million BPD oil equivalent. BP benefited from higher oil prices and no doubt also from the natural gas produced by the old Atlantic Richfield and Amoco assets BP acquired up years ago. BP increased the dividend by 31% to $3.25/shared ADR. This corresponds to a yield of 4.7% at yesterday's closing price, and again shows, as I have repeatedly pointed out, how paltry Exxon Mobil's dividend is at a scant $1.40/share for a 1.5% yield.

Royal Dutch Shell profit rose to $9.08 billion vs. $7.28 billion. Shell's production was up slightly to 3.44 million BPD oil equivalent. Shell's awesome performance led them to increase their dividend by 11%.

Comparing BP to Shell from an investment view, it is interesting to note that BP's production is some half a million BPD more than Shell's, yet their net income was over $1 billion dollars less. It just goes to show how much further BP should be able to increase operational efficiency. This could well lead to continued stock price appreciation in comparison with its peers. BP's high dividend yield is also an attraction. BP certainly appears to be making strong headway in their turnaround efforts.

These earnings results should bode well for other foreign oil companies such as Total (NYSE:TOT) and StatOil (NYSE:STO). StatOil will release their earnings on May 13. Exxon Mobil's (NYSE:XOM) earnings are due on Thursday.

Disclosure: The author is long STO and owns the other oil companies mentioned in this article indirectly via mutual funds.