Top Picks 2017: BP
01/09/2017 6:00 am EST
This global energy firm — our Top Pick for income — has been buying big-ticket businesses worldwide as part of what its CEO calls “long-term strategic moves” for “a new phase of growth”, explains Vivian Lewis, editor of Global Investing.
BP plc (BP) has made recent deals that include a $1 billion investment in offshore Senegal and Mauritania which hold some 50 trillion cubic meters of gas.
The company also bought 2 new North Sea blocks in Britain and Norway waters, and another one worth $9 billion down the road from its us Gulf of Mexico disaster site.
BP paid $2.2 billion to become a shareholder in the consortium drilling onshore in Abu Dhabi.
It also became operator of a multinational drilling venture offshore of Azerbaijan in the “monster field” of Azeri-Chirag-Gunashli, which may hold 50 trillion cubic meters of gas. BP is also a key partner in Russian oil production.
The company is continuing its shopping fling with the purchase of the Australian Woolworth's chain of Woolie's gas stations for US$1.3 billion, adding another 500 stations to the 1,400 or so it already runs Down Under.
This is further confirmation that BP expects to be able to fund its ambitions again, after the sale of $50 billion in assets to fund the Deepwater Horizon disaster of 2010.
Throughout last year, BP had been funding its generous 6.4% yield from downstream profits, from refining and distributing oil and gas profits, but from 2017 it will be raking in money from its fields, mostly holding cleaner gas rather than oil.
BP is expected to lose money for 2016. But 2017 is another thing. While most analysts have not yet been able to tally up the impact of all these recent deals, the brave ones atUBShave raised BP to a buy. I have as well, and have selected this stock as my top yield pick for 2017.
Editor's Note: Last year, Vivian Lewis chose Veresen (Toronto: VSN) as her Top Pick; is rose 51%. She now says, "This Canadian pipeline operator, was hurt last March when its application to build a plant in Oregon, was turned down by the US Federal Energy Regulation Commission (FERC).
It is appealing the US decision which may be reversed by the Trump administration. Our Canada expert, Martin Ferera, says don't wait for a FERC reversal but buy the stock for its 7.65% yield."