giant BP hopes to use some of its Russian windfall to pay for a multi-billion pound share buyback next year.
The FTSE 100-listed firm is thought to be looking at plans to snap up shares worth at least £2.5bn to make sure its investors do not lose out in the wake of its cash and shares deal to exit Russian venture TNK-BP.
A buyback could also help lift BP’s share price, which is still lingering below the highs seen before the Gulf of Mexico oil spill.
BP’s $4.5bn (£2.8bn) payment last week to resolve criminal charges related to the explosion and spill at its Macondo well was bigger than expected, but gives the firm a clearer picture of the final cost of the 2010 disaster.
Removing the threat of further criminal penalties means BP can start to make plans for the $12.3bn it will receive after its disposal of a 50 per cent stake in TNK-BP.
In this deal, unveiled last month, BP will hold a near-20 per cent stake in Rosneft, TNK-BP’s new owner.
Chief executive Bob Dudley said last month that “at a minimum, our intention is to use part of the cash proceeds to offset any dilution to earnings per share as a result of this proposed transaction”.
Analysts have forecast earnings per share dilution of around three to four per cent, and have pointed to a buyback of between $4bn and $6bn once the Rosneft sale closes in early 2013.
But the timing of a buyback remains uncertain, due to a long-awaited civil class action in the United States over the Gulf spill that could cost BP billions. The firm declined to comment.