BP Plans $8bn Share Buyback Following TNK-BP Sale

BP will return its original $8bn investment in TNK-BP just one day after the formal closing of the sale of its former Russian joint venture.

BP said it will buy back $8bn worth of its shares and retain around $4.48bn from the $16.6bn sale of its half of the joint venture to Russia's state-controlled oil producer Rosneft. BP agreed to the sale of its TNK-BP share in October of last year in exchange for $12.48bn in cash and a further 18.5 percent holding in Rosneft that takes its holding to just under 20 percent.

"This is the beginning of a distinctive and exciting future consistent with our strategy to invest in Russia and leverage our unique expertise to create value for BP and our shareholders, for Rosneft and for Russia," said BP Chairman Carl-Henric Svanberg in a statement published Thursday.

BP last purchased its own shares in 2008, according to its investor relations website, when it bought around 270m for a total of $2.9bn. It's largest share buyback occurred in 2006, when it spent $15.4bn repurchasing around 1.3bn in BP shares.

BP shares rose 2.7 percent in London trading to change hands at 462 pence each, taking the year-to-date gain to 8.3 percent. The shares have risen around 50 percent since hitting an all-time low of 305 pence each following the fatal Macando explosion that took the lives of 11 workers on the Deepwater Horizion oil rig and resulted in one of the largest oil spills in US history.

BP shares are still trading around 27 percent lower than the 651 pence level hi on 16 April 2010 - just days before the Gulf incident.

Earlier this week, BP lost an effort to dismiss the potential of paying a $17.6bn fine for gross negligence in connection with the Deepwater explosion following a ruling from US District Court judge Carl Barbier in New Orleans.

BP, along with its partners in the rig, Transocean and Halliburton, are currently engaged in a trial that could trigger many billions more in punitive damages if Judge Barbier finds they acted in violation of the US Clean Water Act.

US District Judge Sarah S. Vance accepted BP's guilty plea to 11 felony counts related to workers' deaths as well as a felony related to obstruction of Congress and two related misdemeanours after a hearing in New Orleans last month. BP will also pay a record $4bn fine and face five years of probation for its role in the blast and the spill the followed.

The fine includes $1.25bn in criminal penalties, $2.4bn owed to the National Fish and Wildlife Foundation, a $525m civil penalty to the Securities and Exchange Commission and a $350m payment to the National Academy of Science. The total sum of $4.5bn will be paid over five years.

BP has also agreed to pay $7.8bn last year to cover the economic, property and pollution-related damages linked to what has been called the worst environmental disaster in US history.

Transocean agreed on 3 January to pay $1.4bn in civil and criminal penalties for its role in the disaster after reaching an agreement with the US Department of Justice. The group said at the time it will plead guilty on 4 February to one misdemeanour violation of the Clean Water Act and accept five years' probation.