This post was originally published on this site
Investing.com – BP ADRs (NYSE:BP) slumped 8.6% in premarket trading Monday after the company said it will exit from its stake of around 20% in Russia’s Rosneft (LON:ROSNq), a decision that is likely to leave a big non-cash charge on its books.
The British company has held that stake since 2013. The company said it will also exit its other businesses with Rosneft within Russia.
The abrupt move follows Russia’s attack on Ukraine last week that has prompted several European and American companies to have a relook at their interests in the Communist country. Norway’s Equinor has taken a similar decision.
Additionally, BP said its Chief Executive Officer Bernard Looney has quit the Rosneft board with immediate effect.
At the end of 2021, BP’s Rosneft stake was worth around $14 billion. Accounting changes may result in another $11 billion hit for BP. The impact of the move, including the removal of Rosneft’s dividend from the books, will reflect in the company’s current quarter results, BP said.
With a European or an American buyer ruled out for BP’s stake, the sale is likely to be a distressed one.
American oil majors, namely Shell (NYSE:SHEL) and Exxon (NYSE:XOM), too, hold big stakes in oil and gas projects in Sakhalin, in the far east of Russia. They have so far been silent on the fate of their holdings.
Notwithstanding the blow, BP reiterated its forecast for a capital expenditure of $21 billion-$22 billion in the current year. It is also holding on to its commitments to dividends and buyback.
