BP plc (ADR) (NYSE:BP) finally delivered for long-time owners of BP stock this past year. Up 27.3% in 2016, it was the stock’s best annual performance since 2009, the year prior to the Deepwater Horizon oil spill.

That should be music to the ears of BP CEO Bob Dudley who took the helm on October 1, 2010, after former CEO Tony Hayward resigned five months earlier.

By promoting Dudley to CEO, the native of Mississippi became the first American to run the British oil company.

Unfortunately, BP stock hasn’t kept the momentum going so far in 2017, down 6.8% through Mar. 22. Was 2016 a dead cat bounce? Should investors consider owning BP stock despite lingering memories of the tragedy in the Gulf of Mexico that took the lives of 11 people almost seven years ago?

Five Reasons to Own BP stock

Exxon Mobil Comes Calling 

There’s nothing official mind you, but earlier this month rumors started spreading that Exxon Mobil Corporation (NYSE:XOM) was courting BP’s largest shareholders in a preliminary move to circle the wagons ultimately leading to a bid to buy the company for as much as $150 billion.

InvestorPlace contributor Aaron Levitt, whose specialty is energy companies, seems to think the speculation has legs given Exxon’s need for oil production — BP produces 3 million barrels of oil per day from its major assets in the North Sea, Gulf of Mexico, Middle East and Alaska — and its ability to finance such a deal.

Despite serious regulatory issues, both sides win in an Exxon/BP merger. Whether it happens is an entirely different matter.

Egypt

It’s not how much you own that counts in the oil and gas business, it’s the quality of your assets and nowhere is BP in better shape than in the burgeoning Egyptian market where it owns 10% and 25% of the Shorouk and Nooros natural gas fields, respectively; both very new natural gas discoveries that could generate huge future revenues.

Given the potential of finding other natural gas deposits in a country, which accounts for just 1% of the world’s annual oil production, it’s no wonder that BPs committed to spending $13 billion annually in Egypt by 2020.

Free Cash Flow

Currently adjusted to exclude a $7.1 billion pre-tax charge related to the Gulf oil spill payments, its free cash flow is $1.8 billion. By 2021, BP predicts that it will be as much as $24 billion based on $55 barrel of oil and a $35 breakeven price per barrel.

In 2017, its breakeven is $60 per barrel, so while it’s got some work to do if it comes anywhere close to these projections, BP stock isn’t going to be trading at a lowly $34.

7.1% Dividend Yield

Word on the street is that BP isn’t going to be able to keep paying its 60-cent quarterly dividend given its reduced cash flow. InvestorPlace contributor Chris Lau recently reminded readers that despite cash flow falling 40% in 2016, management wasn’t going to cut the dividend payment.

In 2016, BP paid $4.7 billion in dividends. With $23.5 billion in cash and a real possibility that it could generate more than $1.8 billion in adjusted free cash flow in 2017, I can’t imagine the company cutting the dividend after seven years of BP stock underperforming.

Now that BP is growing again, it would send absolutely the wrong message to investors.

Valuation

According to Morningstar, BP has a forward price-to-earnings ratio of 15.7 while Exxon’s is 19.5 and Chevron Corporation (NYSE:CVX) is even higher at 24.2. All three have seen operating profits seriously disappear over the last three years, so from that perspective along with the 7.1% dividend yield, I can’t help but think that BP stock, on a relative basis, deserves a little more love from investors.

Bottom Line on BP stock

I absolutely can’t stand oil stocks. For me, they’re the Warren Buffett equivalent of tech stocks. I don’t understand them and probably never will.

That said, if I was given $5,000 by a complete stranger to invest in either BP, XOM or CVX, I’d plunk it down on BP because it’s got the most upside, especially if it meets its 2021 targets.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.