London Evening Standard: BP leaves rivals standing
Alex Brummer, Daily Mail
28 April 2004
LORD (John) Browne resisted the temptation to crow over the discomfort of long-standing rival Shell as BP unveiled record-breaking first quarter figures.
Shell is too easy a target. It is not often that one of Britain's blue-chip companies is required to dismiss three of its top executives, delay release of its annual report and become the subject of regulatory inquiries on both sides of the Atlantic.
It has been widely reported that the Securities & Exchange Commission in the United States is making all the running in turning over Shell's affairs. But it is my understanding that the SEC is now working in close co-operation with the Financial Services Authority*, which is carrying out its own far-reaching investigation.
This is not to say that reporting oil reserves is necessarily a precise exercise. Browne and his chief financial officer Byron Grote have acknowledged as much, noting that the reserve figures which appear in BP's annual report could yet be different from those given to the SEC. But the differences in BP's case will be insignificant, not the whopping 20%-plus over-reported at Shell.
Where BP may feel vulnerable after its bumper first-quarter is in the speed of profits accumulation, calculated at £335 per second, a red rag to the nation's motorists.
But we should not get too hysterical about one of the country's best-performing global firms doing so well. BP has already explained that any profits it makes as a result of the oil price being more than $20 a barrel will be returned to shareholders through buybacks of its own shares.
Since most motorists are also indirect investors in BP through insurance policies, pensions and Isas, and it is the government that creams off the large part of the cost of a litre of petrol, no one should become too agitated.
Browne's method of management at BP is unrelenting change. The first quarter is no different on this front. A chunk of the petrochemicals businesses - a management distraction, are to be floated - yielding a hefty oneoff gain.
There are also indications that Russia, despite the latest rumbles from rival Yukos, is proving a useful investment, with the TNK-BP joint venture making a positive contribution.
Shell cannot even find the reforming zeal to unify its British and Dutch management and share quotations under one umbrella. While this injured giant limps along, BP is sprinting like a gazelle.