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British Oil major BP PLC reported better than expected fourth quarter earnings Tuesday. $BP raised it's dividend as revenue is boosted by surging production. $BP report after fellow majors $XOM, $CVX, RDSA, $COP  and $TOT reports. 

Bp Rig

BP PLC ADR (NYSE: $BP) Reported Earnings Before Open Tuesday

$1.04 Beat $0.84 EPS Forecast and $75.68B Beat $74.36 Billion in Revenue

Earnings

BP reported Q4 earnings Tuesday with the underlying replacement cost profits, which strip out the value of oil held in inventory,  of $3.477 billion, up 65% from the $583 million reported over the same period last year and ahead  the company-supplied forecast of $2.63 billion.

The adjusted diluted earnings per American depositary share (ADS) were $1.04 on sales and operating revenues of $75.68 billion. In the same period a year ago, the company reported earnings per ADS of $0.64 on revenues of $67.82 billion. Analysts had estimated earnings per ADS of $0.84 and revenues of $74.36 billion. One ADS is equal to six ordinary shares.

For the full year, BP reported earnings per ADS of $3.82 and revenues of $298.76 billion, compared to per-ADS earnings of $1.88 and revenues of $240.21 billion in 2017. Analysts were looking for revenues of $312.99 billion and earnings of $3.63 per ADS.

BP also said it will pay a 10.25 cents per share dividend, an increase of 2.5%. 

BP PLC NYSE: $BP

Market Reaction Pre-market  $42.78 ▲ 1.39 (3+.36%)

"We now have a powerful track record of safe and reliable performance, efficient execution and capital discipline," said CEO Bob Dudley. "And we're doing this while growing the business - bringing more high-quality projects online, expanding marketing in the Downstream and doing transformative deals such as BHP." "Our strategy is clearly working and will serve the company and our shareholders well through the energy transition," 

Highlights

  • BP said payments linked to the 2010 Gulf of Mexico oil spill topped $3.2 billion over the whole of 2018 but are likely to fall to around $2 billion, after tax, in the current calendar year. 
  • BP completed $3.5 billion in asset divestitures last year and expects to divest another $10 billion in assets over the next two years.
  • BP’s price realizations for liquids rose from $56.16 a barrel in the fourth quarter of 2017 to $61.80 a barrel.
  • Sequentially, realized prices on liquids dropped by near $8.00 a barrel.
  • Natural gas averaged $3.23 per thousand cubic feet in the year-ago quarter, compared to $4.33 in the fourth quarter of this year.
  • For 2019, BP expects production to rise as new major projects come online.
  • First-quarter production is forecast to be flat sequentially at around 1.32 million barrels a day.
  • Downstream (refining) pretax profits increased by about 21% year over year to $2.14 billion.
  • On an adjusted basis, refining profits increased from $2.11 billion a year ago to $2.17 billion.
  • BP’s refining marker margin of $11.00 a barrel compared with $14.40 in the year-ago quarter and $14.70 in the third quarter of this year.

Outlook

For the current quarter calls for lower industry refining margins and narrower North American heavy crude oil discounts which in the past has seen lower downstream profits.

To date, BP has paid out almost $67 billion in pretax charges related to the Deepwater disaster. In 2018, the company paid out a total of $3.2 billion and said it expects to pay an additional $1.9 billion in the current fiscal year.

CapEx

BP’s organic capital spending totaled $4.4 billion in the fourth quarter. For the full year, capex totaled $15.14 billion, down from $16.5 billion in 2017.

 

BP PLC Q3 Earnings Recap

$1.15 Forecast $0.85 EPS on $80.8 Billion in Revenue

Earnings

BP reported Q3 earnings Tuesday adjusted diluted earnings per ADR of $1.15 on revenues of $80.8 billion. In the same period a year ago, the company reported earnings per ADR of $0.74 on revenues of $60.81 billion. Analysts had estimated earnings per ADS of $0.85 and revenues of $79.86 billion. One ADS is equal to six ordinary shares.

BP’s adjusted replacement cost profit (adjusted net income/loss) was $3.09 billion, compared with $1.38 billion in the year-ago quarter. BP posted an unadjusted replacement cost profit of $3.35 billion, $0.93 per ADR, compared with a profit of $1.77 billion and a net profit per ADR of $0.42 in Q3017. The result were ahead of the consensus estimate of 85 cents per share.  Upstream benefited from higher oil and gas price realizations.

BP's full-year consensus estimates were for earnings of $3.41 per share and revenue of $294.63 billion. This represents year-over-year changes of +81.38% and +20.46%, respectively.

Seasonal turnaround and maintenance activities limited its output levels In the downstream segment, the company expects high level of turnaround activities at its Whiting refinery in the United States. While turnaround activities may impact throughput levels, the improved refining margin environment  offset the adverse impacts to a considerable extent.

BP PLC NYSE: $BP

Market Reaction Pre-market 42.14 +1.11 (+2.71%)

CEO Bob Dudley said: Our focus on safe and reliable operations and delivering our strategy is driving strong earnings and growing cash flow. Operations are running well across BP and we’re bringing new, higher-margin barrels into production faster through efficient project execution. We have made very good progress with our acquisition from BHP and expect to complete the transaction tomorrow. This will transform our position in the US Lower 48 and we expect it to create significant value for BP. This progress all underpins our commitment to growing distributions for our shareholders.

Highlights

      • BP’s price realizations for liquids rose from $47.45 a barrel in the third quarter of 2017 to $69.68.
      • Natural gas averaged $2.89 per thousand cubic feet in the year-ago quarter, compared to $3.86 in the third quarter this year.
      • Downstream (refining) pretax profits increased by about 3.4% year over year to $2.25 billion. On an adjusted basis, refining profits slipped from $2.34 billion a year ago to $2.11 billion.
      • BP’s refining marker margin was $14.70 a barrel, compared with $16.30 in the year-ago quarter and $14.90 in the second quarter of this year.
      • The outlook for the third quarter calls for lower industry refining margins. BP also expects a significantly higher level of turnaround activity in the second half of the year, particularly at its Whiting, Indiana, refinery.
      • To date, BP has paid out almost $67 billion in pretax charges related to the Deepwater disaster of April 2010.
      • In the third quarter, the company paid out a total of $470 million.
      • BP’s organic capital spending totaled $3.7 billion in the third quarter.
      • For the year to date, capex totals $10.7 billion, down from $11.9 billion in the first nine months of last year.

Pre Report Comments

Piper Jaffray analysts.

Piper Jaffray rated BP 'overweight' on Oct. 22 with a $52 price target,. Piper's Jaffray believe a series of new projects through 2021 remain in line with projected production growth and could produce strong earnings.

      • "Adding 900mboe/d of new projects through 2021 that underpins the targeted 5% production CAGR from 2016 to 2021E" .
      • "production growth is toward upper-end of the peer group," 

BP leads the industry in free cash flow yield and is likely to hold the advantage.

Goldman Sachs analysts

In August Goldman issued a note;

      • BP "is on the cusp of delivering one of the industry's strongest pipelines of new oil & gas projects."
      • "We estimate that BP's portfolio of new projects is more profitable today and is now among the best in the industry."

One potential headwind would be falling oil prices. Oil prices have risen in 2018  with the WTI Crude Oil index increasing 10.6% this year, and the Brent Crude Oil index rising about 15.3% on the year. 

Live From The Pit 

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