BP Beats Q1 Earnings Estimates On Key Upstream Projects

BP plc (LON:BP) (NYSE:BP) reported first-quarter 2019 adjusted earnings of 70 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line surpassed the Zacks Consensus Estimate of 68 cents but deteriorated from the year-ago quarter’s 78 cents.

Total revenues of $67,407 million in the quarter declined from $69,143 million a year ago but surpassed the Zacks Consensus Estimate of $63,243 million.

Oil equivalent volumes from key upstream projects along with increased contributions from fuels marketing businesses backed the company’s better-than-expected quarterly results. This was offset partially by lower refining marker margins.

Operational Performance

Upstream

In the first quarter, total production of 2.656 million barrels of oil equivalent per day (MMBoe/d) was higher than 2.605 MMBoe/d a year ago. Major upstream projects, which were brought online since 2016, along with acquired U.S. shale resources of BHP backed production volumes in the quarter.

The company sold liquids at $56.47 a barrel in the first quarter as compared with $61.40 a year ago. It sold natural gas at $4.02 per thousand cubic feet, compared with $3.78 a year ago. Overall price realization fell to $39.37 per barrels of oil equivalent (Boe) from the year-ago level of $41.39.
After adjusting for non-operating items and fair value accounting effects, underlying replacement cost profit before interest and tax for the segment was $2,928 million, down from $3,157 million a year ago. Lower realized prices from oil equivalent barrels of liquids primarily led to the downside.

Downstream

Segmental profits declined to $1,733 million from $1,826 million in the year-ago quarter, owing to lower refining marker margin. This was offset partially by higher contributions from fuels marketing businesses.

Refining marker margin of $10.2 per barrel in the first quarter of 2019 was lower than $11.7 in the year-earlier quarter. Moreover, total refinery throughput decreased slightly to 1,739 thousand barrels a day (MB/d) from 1,761 MB/d a year ago.

Refining availability was 94.3%, compared with 94.8% a year ago.

Rosneft

The segment recorded profits of $567 million, up from $247 million a year ago.

Financials

BP's net debt was $55,075 million at the end of the first quarter, higher than $39,993 million a year ago. Net debt ratio was 30.4%, above 27.8% in the prior-year quarter.

Oil Spill Costs

Through the March quarter of 2019, the integrated energy firm made a payment of roughly $600 million, after tax, associated with the oil spill incident in the Gulf of Mexico. BP continues to project oil spill payment of roughly $2 billion for 2019.

Outlook

The company anticipates oil and natural gas production in the June quarter of 2019 to be flat sequentially. BP also expects industry refining margins to improve through the June quarter.

Zacks Rank and Key Picks

BP currently carries a Zacks Rank #3 (Hold). Meanwhile, better-ranked players in the energy space are ProPetro Holding Corp. (NYSE:PUMP) , Parsley Energy (NYSE:PE) and TransCanada Corp. (TO:TRP) , each holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Midland, TX-based ProPetro’s 2019 earnings is pegged at $2.42, indicating 21% growth over the year-ago reported figure. Next year’s forecast is $2.70, hinting at 11.5% growth.

The Zacks Consensus Estimate for Austin, TX-based Parsley’s 2019 earnings stands at $1.53, implying an 8.5% improvement over the prior-year reported number. Next year’s projection is $2.47, calling for 61.8% growth.

TransCanada has beaten estimates in the last four quarters, the average being 19%.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>