BP Plc and its billionaire partners in TNK-BP asked management to review the Russian oil venture’s “significant” cash pile and assess its ability to resume dividend payouts.
Management will make recommendations on dividend payments for the board to consider in the next few weeks, the Moscow-based venture said today in an e-mailed statement. TNK-BP had $2.4 billion of cash and deposits at the end of June after generating free cash flow of $3.9 billion in the first half, according to a company presentation.
In July, AAR, the group representing the billionaires, voted down BP’s proposal for a $1 billion dividend, saying a payout wasn’t prudent at the time. No proposals on dividends were made for the board meetings held yesterday and today, two people with knowledge of the meeting said, declining to be identified.
The U.K. explorer is pursuing a sale of its half of TNK-BP after years of tension with its partners about strategy and expansion. AAR and OAO Rosneft are both looking to buy the 50 percent stake.
TNK-BP hasn’t paid dividends on 2012 income as it has lacked a functioning board since December. Ex-German Chancellor Gerhard Schroeder and James Leng, a former chairman at Corus Group Ltd. and Rio Tinto Group, quit the board last year amid a shareholder dispute arising from BP’s failed attempt to form an alliance with state-run Rosneft.
TNK-BP can distribute additional dividends with the approval of its current directors, while regular payouts can only be voted on by a full board, the company said in July. Russia’s third-largest oil producer has paid BP $19 billion in dividends since 2003 and accounts for a quarter of the London-based company’s global output.
The board also supported a $3 billion plan to develop the Rospan natural gas project with some details on a gas sales agreement still to be completed, the people said, without being more specific. Final approval for the project is expected next week, TNK-BP said in the statement.
The directors approved continuing work on a $1.2 billion project to build a hydrocracker at the Ryazan refinery, according to the statement.