It’s earnings season again for the major integrated energy stocks. For former British giant BP (BP), each earnings report continues to be a “make or break” moment for the firm. And with its latest report, you’d think that everything was finally coming up roses for the energy stock.

And at first blush it is.

But digging deeper and you see several glaring issues still making themselves known. And with its Deep Water Horizon problems still going strong, BP stock may not be the best choice for long-term investors if this keeps up.

A Dividend Increase For BP Stock

If you’re looking at BP’s latest earnings, the first thing that jumps out at you is that the firm decided to raise its dividend. As you may remember, back in 2010, BP had a little mishap in the Gulf of Mexico. An explosion abroad the Deepwater Horizon ultra-deepwater drilling rig caused one of the worst oil spills in history. An estimated 4.9 million barrels of crude oil to spill into the Gulf of Mexico. Not to mention the fact that eleven workers died on the rig.

The event cost BP billions in fines, legal fees and settlements with victims. It has also resulted in a virtual garage sale of billions of dollars of prime energy assets.

So for the firm to raise the dividend on BP stock by 5.3% to 60 cents per quarter, you’d think that firm’s troubles were finally behind it.

Well, not so fast.

First, BP’s Deepwater Horizon issues are still overhanging its head. Last September, Federal Judge Carl Barbier ruled that the energy firm was “grossly negligent” and reckless in not performing necessary safety checks on its Macondo deepwater well. Basically, Barbier ruled that BP knew what it was doing when it decided to bypass several tests and assessments. And those two words of “grossly negligent” have some pretty nasty repercussions for the energy firm and BP stock. Namely, the amount of cash that BP will pay in fines is going to surge by a lot. The spills mess is going to be weighing on BP stock for quite some time.

Legal hassles aside, BP’s actually earnings report shows some other problems as well. The glaring thing being that its profits fell a whopping 18%.

As rising supplies and lowered demand has crimped oil prices, BP simply wasn’t able to earn nearly as much for its production as in years past. For the quarter BP was able to sell oil at an average of $91.42 per barrel versus $100.66 it recorded in the year-earlier quarter. Adding to its woes were lower total production due to its massive asset sales conducted over the last few years. The red flag is that firm is pumping out less crude at lower prices. Its upstream segment managed to report a total profit around 12% less than this time last year.

Strike two comes from its involvement in Russia.

BP has had a rough time in the emerging market nation and the latest round of international sanctions due to the Russian invasion of the Ukraine have really begun to crimple its bottom line. Profits for its joint venture with Russia’s Rosneft (RNFTF) fell to just $87 million. That’s a 63% drop from this time a year ago. While BP said that the sanctions were not directly to blame, ultimately they were. What do you think actually has been moving the Ruble downwards the last few months?

All in all, BP managed to report a $3 billion profit, compared with roughly $3.7 billion in the same period a year earlier. Total revenues decreased to $94.4 billion in the third quarter. That’s down from $98.2 billion last year.

Still Taking A Pass On BP Stock

While the dividend increase is certainly promising for BP stock, t really appears to be some “smoke & mirrors” style distraction.

The issue of declining production is probably the most significant for BP stock shares. Already, most of the majors are having a tough go finding new sources of oil that really move the needle. For BP that’s just as critical of a problem. Unfortunately, with the spill overhang still persisting, some analyst have postulated that more asset sales will be needed. That will crimp its production even further.

Also crimping it is BP’s recent decision to cut its CAPEX spending for the rest of this year and next due to the fall in oil prices. BP’s CFO recently said that $70 per share oil — which some analysts have predicted we will see as the global economy stalls — would decimate big oil projects. That’s not good, when you need every drop of crude to count.

Less oil production and lower prices per barrel do not make for a happy investment.

Throw in, any continued issues in Russia and that doesn’t exactly make me want to pull the trigger on BP shares- no matter how cheap they are. Even less so, when other energy stocks that don’t have the legal hassles or production issues have recently falling by the wayside.

All in all, it’s understandable by why BP stock shares haven’t recovered to the pre-Deepwater Horizon highs. I suspect they won’t anytime soon, dividend increase or not.

Disclosure: None.