Last week, Aker BP presented its fourth-quarter report, summarizing its full year. The stock fell on the report and has continued to fall slightly since then. The dividend was increased by 5% to USD 2.52 per share. The company has had a good dividend history since the pandemic with many increases.
If we look at the dividend payout ratio from 2017-2024, it has been very good on average in terms of free cash flow (FCF). Of course, some quarters have been better than others. The trend is to distribute a little more than half of the free cash flow. This also gives the company the muscle to continue investing.
The vision right now in Aker is to maintain production above 500 thousand barrels of oil per day for the next 5 years at least. Here, current production from existing fields will decrease but the new projects will contribute positively.
It is important to remember that the reason why the price has dipped is not that the company sees any worse prospects going forward. Rather, it has to do with a lower oil price. An investment in Aker means that you become very exposed to the development of oil over time.
My own hope is that the oil price will stay at a lower level for a while longer so I can add extra shares in Aker.
Oil price
I would say the absolute best thing about the company is their very low production costs, which stand out among competitors. Here, costs have decreased drastically from 2022.
The projects that are currently being run are going according to plan and, as mentioned, the idea is that these will replace the reduced production in existing fields.
Today, Aker is trading ex-dividend, which is why the share price is falling. Since you receive the dividend quarterly, it may be time to add to your holdings now.
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