BP unleashes a gusher

THE humbling of BP by the Obama administration and courts in Louisiana is one of the most disgraceful episodes in modern capitalism. Sure, BP messed up big time with the Deepwater Horizon tragedy, but the price of £54bn paid so far is beyond reasonable.

It is to the credit of chief executive Bob Dudley that for almost a decade he has stuck to the task of restoring shareholder value, which is important for every pension and tracker fund in the land.

Loving big oil is hard. The rocket-and-feather approach to the cost of petrol at the pumps, shooting up when global prices rise and falling slowly when they drop, means BP will never be popular among motorists.

Nevertheless, it is encouraging that profits, driven by the rising price of oil for much of the year, soared to $12.7bn (£9.8bn) in 2018, almost twice the previous year.

Britain’s relations with Russia may have hit a low last year after the Salisbury poisonings but BP’s commercial tie to the Russian oil giant Rosneft was unaffected and its 20pc stake has proved an earnings gusher.

BP’s greatest strength has been its skill in exploration and discovery, which means through all its political difficulties reserves have remained strong.

Capital spending remains high and BP will seek to balance the books over the next couple of years by some beefy asset sales.

There are big questions which BP needs to confront. Is it a big enough player in the natural gas market (embraced by Shell)? Has it thought enough about a post- oil agenda as the motor industry races towards a greener future?

And after the Dudley era, which has brought an air of stability to leadership, what comes next?

It is a recognition of the chief executive’s achievement that succession will loom so large.

Basket fillers

THE prospect of a tie-up between Ocado and Marks & Spencer is the kind of thing which gives retail mavens goosebumps.

But it will not be simple in spite of the common heritage of Sir Stuart Rose, the former M&S boss who now chairs Ocado. M&S desperately needs online delivery and has conducted several of its own trials.

The biggest barrier is the size of the M&S food basket which, without the ballast of washing powder and other everyday items, tops out at around £60 and rarely reaches the £100 or so where the economics makes sense. Other barriers to be overcome include Ocado’s current deal with Waitrose, which shares middle England turf with M&S, and Ocado’s deal with Morrisons.

But it is not beyond the wit of the parties to come up with a shared shopping basket. After all, Ocado already offers specialist meat and deli products not to be found in any Morrisons or M&S store. So mix-andmatch should be possible.

But whether it will be the food panacea which M&S chief executive Steve Rowe needs is a moot point.

What the stock market is beginning to understand is that it doesn’t very much matter who Ocado is in bed with in the UK because it is no longer an online grocer, as originally thought, but an Amazon for fresh food. Investors are willing to keep pushing up the share price, irrespective of current profit, because of the prospective pay-off.

What Ocado customers in France, Canada and, most significantly, the huge US market want is Ocado’s brilliant logistics – including new one-hour delivery in cities – and low-cost robotic warehouses.

Who knows, it could eventually become an early adopter of autonomous driven trucks. There is bound to be focus on over-generous compensation for chief executive Tim Steiner and his team.

But if Ocado turns into the UK’s tech champion there can be no complaints.

Stalking the eagle

MAVERICK investor Edward Bramson is like a dog with a bone when he sets his sights on shaking up a target company. He allows nothing to get in his way.

Indications are that long-term investors in Barclays (even those with stakes in Bramson’s vehicle Sherborne) are less than enthusiastic about the New York-based activist’s effort to convert his 5pc holding in Barclays into a boardroom seat.

That hasn’t stopped him seeking election at the May 2 annual meeting.

But when push comes to shove, convincing the shareholders may be the least of Barclays’ worries.