BP (NYSE:BP) Takeover Speculation and the Dividend

Mounting pressure on BP's (NYSE:BP) Bob Dudley to reinstate the dividend says something about the way shareholders view the company, and if they believe the management has confidence going forward.

Continuing speculation the company could be ripe for a takeover isn't without some justification, as numerous elements remain in place that haven't been resolved, and make it difficult, if not impossible, to bring the dividend back.

From the point of view of BP shareholders, they can't understand the numerous variables involved in the underlying reasons behind decision-making at BP, but one thing almost all shareholders understand, no matter what company of sector they're in, is if they increase the dividend or have a dividend, the company has confidence in its future prospects.

For that reason, if BP is able to, they will reinstate the dividend as soon as possible. If not, they could be announcing to their shareholders and competitors they're on the auction block.

In the near future, shareholders don't have to understand the complexities surrounding the fallout coming from the Gulf disaster, all they have to do is wait to see if the dividend is reinstated.

If it isn't, BP is saying through their action, or rather, non-action, they have no confidence at the time for the prospects of the company. If they do that for too many quarters, shareholders will start to flee the company, especially large institutional investors, and BP will have little, if any, defense against being taken over by a larger rival.

The only other option would probably be to split the company up.

Shareholders are getting impatient, and CEO Bob Dudley, and the board of directors, if at all possible, need to get the dividend reinstated asap.

BP (NYSE:BP) Shares Hurt by Moratorium

Being the largest energy company operating in the Gulf of Mexico, BP (NYSE:BP) was hit hard by the oil drilling moratorium imposed by the Obama administration. Their next quarter will reflect that with lower revenue and earnings.

Expectations for the performance of BP for the last quarter are being lowered, as it looks like they'll be generating a profit of $4.8 billion, down from $5.4 billion in profits last year in the same quarter.

This will be measured against BP's peers, who are expected to have improved quarters, and which will put the pressure on new CEO Bob Dudley to do something to improve the performance of the company and reinstate the dividend.

Most industry observers say if BP doesn't reinstate the dividend soon, they will probably incur a loss of major shareholders like pension funds who have held onto their shares in light of hopes of the dividend being instated soon; the only reason they invest in BP in the first place.

BP has historically paid out more than their competitors in dividends.

BP will report their earnings on November 2.

BP (NYSE:BP) Stock Prices Rise While Energy Stocks Decline

There is a sense of much relief that BP (NYSE:BP) is seeing success in their static kill attempt, causing stock prices to continue to rise. While energy stocks are on the decline.

BP's shares rose another 0.7 percent to $40.95, after the completion of the cementing of the Macondo well. After drawing a downgrade from J.P. Morgan, Transocean plummeted 3 percent to %56.34, after soaring 8 percent in the prior session.

Crude oil futures slide 1.2 percent to $80.98.
The Dow Jones Industrial Average dropped 0.7 percent. With Exxon and Chevron decreasing 0.8 percent and 0.6 percent.

The NYSE Arca Oil Index dropped 0.9 percent to 1,020. The Philadelphia Oil Service Index fell 1.4 percent to 188. The NYSE Arca Natural Gas Index also saw a decrease of 1.4 percent bringing it to 531.