BP (LSE: BP) and Royal Dutch Shell (LSE: RDSB) are by far the largest London-listed oil & gas producers. They both sit at the top table of international oil majors. But which, if either, should you buy?

Disappointing results

BP is one of the world’s leading integrated oil & gas companies, operating in over 70 countries with almost 80,000 employees. As with most oil firms, the share price has suffered as a result of lower oil prices, plummeting from just under 520p back in summer 2014 to its current levels below 360p.

As expected, BP reported disappointing full year results with underlying profits dropping to $5.9bn compared to $12bn the previous year. There was also a pre-tax charge of $12bn linked to the Gulf of Mexico oil spill. Despite this, the company decided to maintain its dividend policy and continue with its quarterly dividend of 10 cents per share.

If market sentiment is to be believed, the future isn’t so bleak. Earnings are expected to remain flat this year at around 12p per share, followed by an impressive 134% leap to 27.93p for the year ending 31 December 2017. Dividends are forecast at 27.36p per share for the current year, followed by 27.37p in 2017, offering a generous yield of 7.7% for the next two years.

Sounds good but how attractive are the shares? BP trades on a forecast P/E ratio of 30 times for the current year, falling to a more palatable 13 in 2017. The chunky dividend should attract income investors, and also help to support the share price in the near term, but I don’t expect to see any significant upturn in the share price until a recovery in the oil price takes hold.

Battered giant

Royal Dutch Shell is a worldwide independent oil & gas company, with around 93,000 employees operating in over 70 countries. It has also taken a beating as a result of the oil price crash, with its shares falling from just below 2,575p in June 2014 to its current levels of around 1,700p.

Last month, the company reported significantly lower net profits for 2015, down 85% to $2.2bn. And the current year is also expected to be a difficult one with analysts forecasting a 34% drop in earnings, but followed by a 79% increase in 2017. Dividends are forecast at 129.51p per share for this year, dropping slightly to 129.05p in 2017, offering prospective yields of around 7.6% over the next couple of years.

The shares trade on 23 times forecast earnings for this year, falling to 13 for the year ending 31 December 2017. As with BP, the shares offer a generous dividend income given the attractive yield forecasts, but the P/E rating isn’t low enough to be considered a bargain for value investors.

What next?

Both companies’ fortunes will largely depend on the price of oil, which in all honesty nobody can accurately predict. However, investors might want to drip-feed into both BP and Royal Dutch Shell over the long term to get their hands on those juicy dividends!

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.