Fund managers have shown their support for oil giant BP despite its record $17bn (£11bn) loss in the second quarter.
The group reported the loss this morning and also confirmed Tony Hayward will step down as chief executive in October. He will be replaced by Bob Dudley, who is currently in charge of the Gulf of Mexico oil spill cleanup operation.
However, fund managers say BP has already started to take positive steps to get the business back on track after the disaster.
Tineke Frikkee, manager of the Newton Higher Income fund, has a 7.2% holding in BP. Before the announcement she reassured investors she has been comforted by meetings with senior management as well as the suppliers to the leaking Macondo oil well.
"The political rhetoric surrounding the leak appears to have eased a little, with the US administration acknowledging that it is in nobody's interest to see BP fail.
"Meanwhile, our concerns have been eased by a number of factors; the phasing of the liability payments, the current assumptions on the likely cost of the incident, its asset disposal programme and continuing strong underlying cash generation of the business."
BP has suspended its dividend until the fourth quarter of this year, and the firm plans to review the situation in February next year, but this has not deterred Frikkee.
"These factors, coupled with the strong commitment to deliver future dividends, have led us to retain BP within the fund in anticipation of the early resumption of its dividend stream," she says.
Other managers say the BP's new chiefs should focus on getting the company back on track from a growth perspective rather than concentrating on when shareholders will next receive a dividend.
Philip Haworth, investment manger on the UK equity desk at Aegon, says although £11bn is a "shocking number" it was not a surprise and reflects what the market already knows - an oil spill is "a costly event".
However, he adds, when it is compared to the value wiped off BP's market capitalisation, it is significantly less.
"The share price is overly discounting what the cost to BP will be. We still think there is value there; there is some upside reflecting a more balanced view," he adds.
The Aegon UK Equity Income fund has 5.7% in BP, which is 80 basis points more than the index weighting.
Haworth hopes new chief executive Dudley will focus on generating value for shareholders through whatever means necessary, and says "selling assets is an interesting proposition".
"Already 2% of the resources have been sold for 6% of the market value so there is an opportunity to sell assets at a considerably higher value than discounted in the share price."
Michael Crawford, manager of the LV= UK Growth fund, thinks shrinking the company by $30bn is positive as although it reduces the size of BP, it will be more likely to achieve growth. He agrees the new management should not be so concerned with dividends but on getting the company back into shape.
Meanwhile, Paul Casson, manager of the Henderson Horizon Pan European Alpha fund, says the underlying results released today were strong and calls BP "a highly profitable and cash generative business".
"The provision for the associated costs of the Macondo well explosion totalled $32.2bn. We believe this is a sufficient and realistic amount and note BP's partners on the well (Anadarko of the US and Mitsui of the Japan) will, in due course, have to pay their share of the associated costs," he adds.
He also points to the asset disposal plans as a positive factor: "BP is now targeting $30bn of disposals over the next 18 months, of which it has so far done $7bn. The valuation achieved on the first $7bn was materially ahead of the book value of the assets sold, demonstrating the latent value in the asset base."
