A big component of oil major BP's (BP.) 10% second quarter earnings beat was a strong contribution from its 20% stake in Russian state concern Rosneft (ROSN). A strong rouble had a $300 million impact but this catalyst is likely to reverse in the third quarter given the current trajectory of the Russian currency and political issues.

BP warns that ongoing sanctions against Russia associated with its part in the Ukranian conflict could have a 'material adverse impact'.

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Chart of the week

Investment bank Investec comments: 'These days, reading BP’s quarterly results is arguably a more useful exercise for law students than for financial investors.'

The issues in Russia add to our caution on the company with the remaining liabilities associated with the 2010 Gulf of Mexico oil spill yet to be determined.

On the positive side, the company is on track to achieve its $31 billion 2014 cash flow target with $16.1 billion worth of cash generated in the first half. The risk is these funds will be swallowed up by ongoing legal issues.

Issue Date: 07 Aug 2014